5 different types of money leaks in your Life

Just like water leaking in a bucket, if money starts leaking in your life it will stop you from achieving your financial goals, literally even your financial freedom.

I have written in detail about money leaks happening in your life in my book “Money Leaks”

5 different money leaks happening in your life :

  • Savings & Expense
  • Insurance
  • Investment
  • Loans
  • Lifestyle

Savings & Expense

How many times have you tried saving an amount of money and ended up saying, “Let me see next month, when my financial condition improves.”

“Tomorrow never dies, so start saving now”

Tomorrow Never Dies is one of my favorite James Bond movies. I remember this quote whenever I am spending a lot and not saving. If you need to save, just say to yourself, “Tomorrow never dies, so start saving now.”

Best example for everyone to understand this impact is the mobile. It has brought the whole world into our hands. There is no doubt about this fact. I still remember my first mobile that I bought in 2006. It cost around INR 2000 and was usually recharged for few hundred rupees a month. Once I joined my corporate career, my first mobile was Nokia. In another two years, I bought Sony for INR 10,000. Then from 2011, I started buying premium mobiles for around INR 30,000. This expense has slowly crept into everyone’s family.

Mobiles have become one essential expense, which you need to spend on once in two or three years. There are reports that say that a few people change their mobiles even once in a year.

How to control your expenses?

Now it is evident that you spend a lot. Expenses are inevitable. These expenses increase with every rise in income.

“Income increase leads to expense increase

Do you remember your first income?

What is your last month’s income?

How many times has your income increased since you started working?

What is your average monthly expense for your family five years back?

What is your average monthly expense in the last month?

First step to control expenses is to prepare a list before going shopping. Also, prepare a list of big purchases in the next two or three months. Online e-commerce portals started offering discounts once in a quarter, and some offline stores offer discounts even on a monthly basis.

All you need to do is wait for a while until you go and buy these big ticket items.



To protect yourself from an unforeseen situation. Think about the AMCs you take with consumer durable companies or warranty you would take with cars, bikes, etc. All these protect your durables from bigger damages.

Similarly, in your life, if anything happens to you, there will be an emotional and financial loss. Emotional loss may take time and it will not affect a lot of people apart from your family members and friends. Consider the financial loss—your parents’ care, your kid’s education now and in the future, are all at stake.

A simple personal accident policy along with health insurance would have made things easier. Consider taking insurance to prevent financial losses.

It is recommended to have these basic insurances even before starting your investment planning,

  • Term Insurance
  • Personal Accident policy
  • Health Insurance
  • Critical Illness policy

If you are not having health insurance during your health emergency, then it will drain your savings & investments.

If you have not taken term insurance, then in your absence your family will suffer financially.


In India, the known investment types are real estate and gold. Equity as an investment is slowly getting its reach.

Broadly, there can be two types of assets:

  • Physical assets
  • Financial assets

Physical assets are the ones that you can see, touch, and feel. Gold and real estate are the best examples of physical assets. Many would like to have physical assets as it gives the sense of ownership. It can be shown off easily and you can be proud about your achievement. Value of the investment can be seen by comparing it in the open market.

Financial assets are not tangible like physical assets, but it will grow virtually and can be redeemed in a bank. All bank deposits, shares, mutual funds, etc. are financial assets.

Let us look at all the available investment products and their features:

  • Gold
  • Real estate
  • Equity or share market
  • Mutual funds
  • Fixed deposits
  • Post office deposits
  • Alternate investments

Focus on both physical & financial assets. Financial assets will help you to grow your money more than physical assets.


Points to note before taking any loans

1) Be aware of the cash flow in your family

2) Discuss with your partner or dependents

3) Prepare an emergency fund for paying EMIs in case of an emergency

4) Have a plan by when you will be closing your loan

5) Make sure the loan amount does not exceed more than 40 percent of your income

6)Tell yourself not to panic after the EMI has started

7)See the interest chart before signing up for the loan


Lifestyle is nothing but how you want to live your life.

It is easy to understand that with the available money flow you may be forced to live a mean life.

The life of each generation varies. Let us look at the present situation. After liberalization, India slowly moved toward globalization. Everything took time, but people started embracing the change in lifestyle. Right from a refrigerator, washing machine, bike, car, shopping malls, movies, LCD, LED, etc., the things that were once available to only few people, is now available to everyone.

All these changes in your life, makes life so easy. Branding yourself plays an important role. If you are wearing a particular brand, you will be categorized as X. If you are wearing another brand, you will be categorized as Y. People identify you by the way you dress, you travel, you live, etc. these have become lifestyle measures. If you are following a simple life, then you will be categorized as meager person.

If you opt for branded clothing and accessories, it can cost you a lot. It doesn’t end there; you need to start maintaining it for all occasions. You need to groom yourself with regard to your clothes and accessories.

All these have grown in the last decade. It is obvious that it is an additional expense for every family in the last decade. Going by the general inflation chart, the price of these goods increase by 8 percent every year. Some of them rise even more than that.

Focus on lifestyle at the end, so that it gets maintained.

How to achieve financial freedom

Start focusing on the below things in the same order,

  1. Savings & Expense
  2. Insurance
  3. Investment
  4. Loan
  5. Lifestyle

If you focus on improving lifestyle instead of starting with savings, then your money will start leaking by the way of your lifestyle itself.

“Money is the one and only thing which differentiates everyone in this world”

Start with savings, get required insurance, start investing for your future, get loans only when required that too within limits & finally you can improve your lifestyle.

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