Introduction
We need to face reality here—our parents indeed did teach us a lot of life lessons. They taught us the merits of hard work, sacrifice, and saving for rainy days. Unfortunately, money was never an area of expertise for our parents. Plenty of us observed our parents having problems with money or recognised the mistakes that they made, which they could have avoided, or hanging onto their archaic ideas about saving, spending, and investing. As young professionals newly out of financial independence, we therefore have an opportunity to do things differently. It’s time to reflect, relearn, and rewire our money habits. This blog is your simple, no-jargon guide to breaking free from our parents’ financial mistakes and building a smarter financial future.
Table of Contents
10 Types of Past Financial Mistakes to Avoid
- Mistake: Saving Without Investing
Our parents often focused on saving money in traditional ways—fixed deposits, recurring deposits, or keeping it idle in a savings account. While that may have worked in a time of high interest rates and limited options, today, this approach barely beats inflation. The Fix: Learn to invest early
As a young professional, time is your greatest asset. Start investing in inflation-beating tools like mutual funds, index funds, stocks, or even REITs. Begin small if you must, but begin. Compound interest loves consistency. Even ₹1,000 invested monthly can grow significantly over time.
Tip: Consider starting with a SIP (Systematic Investment Plan) in a mutual fund aligned with your goals and risk tolerance.
- Mistake: Not Talking About Money
In many Indian households, money was treated as a private topic—something you didn’t discuss, especially not with kids. As a result, many of us grew up without basic financial education. The Fix: Educate yourself and talk about money openly
Financial literacy is no longer optional. Learn about budgeting, credit cards, loans, taxes, and investing. Talk to your friends and partner about money—open conversations lead to better decisions.
Tip: Use personal finance blogs, YouTube channels, and apps like ET Money, Zerodha Varsity, or Groww to boost your financial IQ.
- Mistake: Living Without a Budget
Our parents often managed household expenses in their heads or with a rough idea of how much to spend. While they made it work, this approach can lead to overspending or missing savings targets. The Fix: Create a monthly budget
Use this as a guideline for setting up your budget: Allocate 50 per cent of your income for needs, 30 percent for wants, and 20 per cent for savings/investments. Budgeting helps you stay on course, avoid liabilities, and push toward future goals.
Tip: The use of apps like Walnut, YNAB (You Need a Budget), or a simple Google Sheet for budgeting purposes can make things easy for you.
- Mistake: Overdependence on Gold and Real Estate
For generations, investors had gold and real estate at their beck and call. These were tangible media considered safe and culturally recommended. But the fast-paced, fluctuating environment of today suggests that they might not exactly offer the best or swiftest returns. The Fix: Diversify Your Investment Portfolio
There is no harm in owning gold or real estate; just don’t let them be the sole investable assets in your portfolio. Start looking into equity mutual funds, NPS, international ETFs, and digital assets (with caution!), to name a few. Diversification drastically reduces risk and increases returns on the investment horizon.
Tip: Keep your asset allocation dynamic, taking into account your age, goals, and risk appetite.
- Mistake: Having Zero or Low Emergency Funds
Many of our parents fell into financial trouble due to untoward emergencies-medicines, job loss, or an expense without any cushion. They had to borrow money, look for assistance from family, or sell their assets. The Fix: Create an Emergency Fund
Keep three to six months of expenses low-key liquid in a savings account or mutual fund. It’s the last line of defense that will prevent you from getting into debt if life unloads another pantograph onto your lap.
Tip: On payday, automatically transfer funds into this account.
- Mistake: Ignoring Insurance
In the past, life insurance was often confused with investment. Many bought endowment plans or traditional policies that offered poor returns and inadequate coverage. The Fix: Get term insurance and health insurance early
A term insurance plan offers high coverage at low premiums. Pair it with a good health insurance policy to protect your savings from medical emergencies. The earlier you buy, the cheaper it is.
Tip: Avoid mixing insurance and investment. Keep them separate for better clarity and efficiency.
- Mistake: Avoiding Credit or Misusing It
Some parents feared credit cards and avoided loans completely. Others used them recklessly, leading to debt traps. Both extremes can be harmful. The Fix: Use credit responsibly
Build a healthy credit score by using a credit card for regular expenses and paying your dues in full. Avoid EMIs for luxuries you can’t afford and prioritize needs over wants.
Tip: Monitor your credit score through CIBIL or online platforms. A good score helps with future loans and lower interest rates.
- Mistake: Not Planning for Retirement
Many parents postponed retirement planning, assuming their children would support them, or relied solely on pensions or PF. With changing family dynamics and rising costs, this approach is no longer practical. The Fix: Start your retirement plan now
Start investing in NPS, PPF, or mutual funds with a long-term horizon. Use retirement calculators to figure out how much you need and adjust your plan as you grow.
Tip: Aim to build a retirement corpus that allows financial independence, not dependency.
- Mistake: No Clear Financial Goals
Our parents often saved without specific goals, just for safety. While that’s admirable, goal-based investing helps you stay motivated and focused.
The Fix: Set SMART financial goals
SMART = Specific, Measurable, Achievable, Realistic, and Time-bound. Whether it’s buying a car, traveling the world, or starting a business, know your why and plan accordingly.
Tip: Use SIPs or recurring deposits to automate goal-based savings.
- Mistake: Not Writing a Will or Nomination
Many families face emotional and legal conflicts after a loved one’s passing, simply because there was no clear will or nominee for financial accounts. The Fix: Ensure nominations and write a basic will
Update the nominees for all your bank accounts, insurance policies, EPF, and mutual funds. Create a basic will—even if you’re young. It’s not about age, it’s about responsibility.
Tip: Use online will-writing services or talk to a legal advisor for guidance.
Breaking Free Means Moving Forward
The act of breaking free from our parents’ bad financial choices doesn’t include criticizing them; it includes learning from their experiences and going further to build a better bedrock for ourselves and Posterity. Young professionals are in a better situation now than all of those before them. We have the very technology, which includes tools, knowledge, and platforms, that could help us in wealth creation, its protection, and its judicious expenditure.
Your financial life is your responsibility. No one else is going to manage your money, plan your goals, or secure your future. The earlier you start, the easier it gets.
Conclusion
Our parents did everything they could with the little they knew. But as young professionals in a new economic world, it’s time that we take control of our finances with clarity, confidence, and purpose. Freeing yourself from the financial mistakes of your parents is not about rebellion; it is about evolution. It is about using the tools, information, and opportunities available today to create an independent, secure, and fulfilling life. Just start with the littlest step every day. Keep it up, and don’t let pride stop you from asking for help or seeking advice. Your future self will thank you.
Please share your thoughts on this post by leaving a reply in the comments section. Contact us via phone, WhatsApp, or email to learn more about mutual funds, or visit our website. Alternatively, you can download the Prodigy Pro app to start investing today!
Are fixed deposits and real estate bad investments?
Not at all! They have their place in a portfolio. But relying only on them limits your growth. It’s important to diversify into mutual funds, stocks, or retirement funds.
What should I prioritize first—insurance or investing?
Start with emergency savings and term/health insurance. Once that’s in place, begin investing for your goals.
Is it okay to take loans?
Yes, if used wisely, like for education, a house, or a business. Avoid unnecessary EMIs for luxury purchases. Always calculate your repayment capacity.
I’m just starting my career. How much should I save?
Aim to save at least 20–30% of your monthly income. Automate savings to make it a habit.
Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.
Assistant Vice President – Research & Analysis
Akash Gupta heads the Research & Analysis department at BFC CAPITAL, where he combines in-depth market insights with strategic analysis. He holds multiple certifications, including:
- NISM-Series-XIII: Common Derivatives Certification
- NISM-Series-VIII: Equity Derivatives Certification
- NISM-Series-XXI-A: Portfolio Management Services Certification
- IRDAI Certification
With his expertise in equity, derivatives, and portfolio management, Akash plays a key role in providing research-backed strategies and actionable insights to help clients navigate the investment landscape.
