5 Money Habits Keeping You Middle Class Forever and How to Fix it

Imagine, your money is like a bucket of water. If there are holes in this bucket, no matter how much water you pour, your bucket won't fill. These holes are your unnecessary expenses, subscriptions, random spending, that new phone, those EMI's. These are holes that won't let your bucket fill. It's not important to earn money and increase income. It's more important to manage these holes, to fill these holes. In this video, let's understand how to close these holes and genuinely fill this bucket. If anyone told you that money is not the most important thing in the world, they are wrong. The truth is that money gives you freedom. The freedom to say no, the freedom to walk away without fear, the freedom to live your life on your own terms.

Without money, the smartest person in the world is forced to live their life on someone else's rules. If you have money, you can't buy only things from it. It comes with respect, control and freedom. You can choose to live your life on your own terms. Money is just a tool and you have to use it. You can use it to make your own life, to make your own choices and to live the life you want to live. People think that by earning more money, all problems will be solved. Wrong. If you can't handle 10,000, then even if you earn 1 lakh, the same story will happen. Yes, earning money is very important, but it's more important to manage it.

How to use it to become a safety shield for you, and how to structure it so that it can give you freedom, the ability to say no. And when you feel that freedom, you will truly know what it means and what it is to be free. To understand where people struggle the most with their money, we talked to people from different professions and backgrounds. And from these conversations, one thing was clear. Everyone has problems, but everyone has their own way of dealing with them. So, whatever your current salary is, what percentage of that are you saving? To be honest, right now, zero. The reason is that I don't have a goal for which I can save.

So, if there is a calamity or a problem, what is the backup option? But unless I keep thinking that any problem will come and then I will save, then I will be compromising a lot on the opportunities right now. Sudhanshu, is there a guilty pleasure that you always spend on? Buying itself... I mean, I love spending. You guys are going to get along. I love this. So, at what age did you start investing? 40. Did you not think about it before? No, I was never worried about it because my parents have money. I am the only one who is not married. So, I am automatically dependent on them. And do you keep an emergency fund?

Yes, I am slowly building it now. Two reasons. First, I didn't know that you have to make an emergency fund. First, I didn't have an education. And second, I didn't have much income at that time. Juhi, what is the dumbest financial decision that you have taken? I was scammed under digital scam. So, I lost almost 2 lakhs. I got a call that you should give your Aadhaar card in a wrong transaction. If that person is in sales, I want to hire someone like that. Will you take a loan to buy your own house? Yes. Even though living on rent makes more sense, you will still buy a house. A house is something that is pretty connected with your heart.

I have seen my parents, how they built their house and connected with it with a heart. I have some non-negotiables that I want to do in my life. I want to live a very luxurious life. I do not want a house, I want a very big house. Love it. And I really want to spend anything for that. So, that is my goal. And if I have to take loan, definitely I will take loan for it. After these interactions, we discovered 5 major problems that most people face. The first is being unprepared for emergencies. The second was to fall into the EMI trap. The third one is relying on uninformed information. The fourth is stagnation of money.

The fifth is making dumb or stupid investment decisions. So, here is the truth. Financial independence comes from control, not income. Control over your income, your savings as well as your choices. The goal is not just to earn more, the goal is to create balance. Every problem has one base, every solution has one structure. So, let's talk about these 5 problems and how we can structure and handle them in our life. You know, I will tell you the reality. Life hits when you are not expecting it. Everything is going well, but then suddenly, an unexpected expense, job loss, family emergency, your entire planning, everything gets scattered. And at this time, you know what protects you? Your emergency fund.

It becomes your silent saviour. But what is an emergency fund? It is a fund through which you can cover your expenses, meet all your financial needs. And at a minimum, you should cover your expenses for 6 months. EMI's, groceries, rent, everything. And by calculating that amount, that should be your target to create your emergency fund. Not in a mutual fund, not with a friend, which you can't ask back. Make it liquid, put it in a fixed deposit or even better, keep it in cash. And very important question is how to make this emergency fund? Honestly, not very hard. Every month, when you get your salary, make a separate account and transfer a minimum amount to it.

You decide. You can make it 500, 1000 and over a period of time, your expenses for 6 months will accumulate. When that emergency comes, you stand still. So, don't let that happen to you. Get ready. Start making that habit today. And make sure when that emergency hits, when life gives you that surprise test, you're ready for it. You're ready to face it. You know, in Marwari, the saying is, spread your legs as wide as your blanket. And my grandfather used to say, when you have money to buy a car, then buy a bicycle. But the world today is different. There is temptation everywhere. You know, every month, when a new phone comes, your old phone starts looking outdated.

You go on Instagram, fancy holidays, fancy clothes, designer shoes. And you feel, why should we stay behind? And then ads come, easy EMIs and zero down payment. But this is a trap. EMIs or savings, it's like a sand glass. As your EMIs increase, your savings keep decreasing. First, it seems like a small amount, every month, it will be finished. But what you don't realize is that you're creating a liability for it. You're probably consuming something right now, you've enjoyed it, but it becomes a lifelong burden. As soon as one EMI is shut down, the second one starts. And it's a vicious trap, where pleasure is temporary, but burden permanent. Even if you want to take an EMI, do not take it because you need it.

Decide to take it. You should be able to afford what you want to buy. EMI is not bad in itself. But when you use it for consumption, it doesn't fund your growth, it funds your guilt. So think carefully before you sign up for your next EMI. One of the biggest mistakes I've seen in managing my money is to understand every overconfident person correctly. Your friend won a very good crypto, so it seems like that can be my plan also. Absolutely wrong. Honestly, keep investing simple. The magic word is not luck. The magic word is truly consistency. You should not put your financial savings on a rumour. Honestly, what you need to do is make an informed decision.

Educate yourself, find yourself a qualified financial planner. Make goals with them and then create these decisions. Einstein said, compounding is the eighth wonder of the world. Let me try and explain. I know it looks a little boring at first, but once you understand it, the power of this word is mind-blowing. Imagine 1 raised to the power of 365. You are doing one thing every day for a year. 1 raised to the power of 365 at the end of the day, Nothing will increase, nothing will change. But let's decide that we will make less effort. We will not make an effort of 1 every day. We will make 1% less effort every day than we did yesterday.

So we do 0.9% of that effort. If we do this every day for 365 days in a year, then you will be left with only 3% of what you started with. This means that if you do something wrong every day, your whole will decrease. Not with this much, but with this much. Finally, let's try the opposite. What if you make an extra effort of 1% every day? I did 1 push-up today, I will do 1.5 tomorrow. And let's raise that to the power of 365. The result is astounding. Because here is when you will see a 38% growth. If you do nothing, nothing will change. If you do something less every day, then problems will increase.

But if you improve a little bit every day, the results will explode. If you plant a seed today, then after a year it will become a tree. But if you go and plant it every day, then nothing will be left. So plant those trees, be patient and wait for your results. Start early, start small. Don't wait for the perfect time. Because that is a fancy version of procrastination. Investing is not an event, it is a habit. Like brushing your teeth every day. If you do this, you will realise that these small actions will compound in the long term and show you genuine magic. If you want to create wealth, then there are 2 magic words.

Simple and consistent. Don't think too complicated. Your work is not financial management. Concentrate on your job. Keep finances simple. At the very basic level, if you don't want to complicate things, look at investing in equities, look at investing in ETFs and SIPs. ETFs are exchange traded funds. It is a fund that tracks the market. Nifty has given a 12% annualised return in 25-30 years. Now imagine if you start investing 5000 rupees a month. Nifty's annualised return is 12%. And if you keep investing this for 20 years, do you know how much you will have by the end of it? A grand total of 60 lakhs at a 12% return. So honestly, creating a large amount of wealth is not impossible.

But the 2 words that you need to be careful about is be simple, be consistent. Your 5000 rupees can become 60 lakhs if you just do it simply. You know, I can tell you from my own experience that it is very important to make mistakes. Every action will not give you results. You will make mistakes and face failure. Even in investing. Imagine that you put your 10% in a washing machine. You are seeing what it does. Is that money getting spoiled or growing? Make small mistakes. Think about what is going on. Someone has given you a very fancy idea. So go ahead, invest in it. But here's the rule. Don't invest more than 10%. Don't put your whole future on it.

You have to learn, do small experiments. Do it. Because this is going to teach you more than any YouTube video. So take 10% money, experiment with it. Make mistakes. But most importantly, learn from it. And realize what you have to do next. Failure is not a problem. The problem is not to try. Growth never comes in a straight line. It is zigzag. Sometimes up, sometimes down. Sometimes you win, sometimes you lose. Financial independence and growth are like this. Sometimes the markets are up, sometimes you win. Sometimes you lose. The important thing is to be consistent. To keep growing, to not stop. Every smart decision, whether it is to invest in an ETF or an SIP, trains your brain muscles.

Until you don't make your own mistakes, you won't learn. Learning from mistakes, experimenting. This is the right formula for growth. Let me give you a very simple formula to live a really happy life. I call this 156520. Let's start from the beginning. 15. Save this. 15% is for saving. Take this money, make this your shield. This is your financial shield. This is your security blanket. In emergency situations, if something goes wrong, if there is a problem, this will always save you. 65 is for living. Use this amount to live your life. Paying the bills for your groceries, EMI, rent, car, shari. Whatever you need for a holistic life, this is the amount you should be spending.

Finally, 20, your dreams. Set this amount to do what you genuinely want to do. Follow your hobbies, follow your passions. Save for a holiday, save for a house. And truly, if you use this 156520 formula, you will realize you will have a really happy, fulfilling and managed life. In life, you don't believe that you should save, you shouldn't enjoy. But if you think and live in balance, you will see you can be incredibly successful, incredibly happy.