7 Smart Money Lessons to Avoid Bankruptcy

to disregard the herd mentality

Abhinav Rai
4 min readAug 30, 2023
Photo by Giorgio Trovato on Unsplash

People do crazy things with money. It’s a life fuel. Money can be the solution to tons of problems. But it has an evil eye on people who fail to take care of it.

People are terrible with their money management, especially the present generation. They are mad about making money rather than sustaining all they have.

People from different generations have gone through a string of experiences. They are born in different generations, raised by different parents, earn different incomes, and hold different values.

They all have a different outlook to money. What seems crazy to you might make sense to someone else. But nothing is as good or as bad as it seems.

People who have an unhealthy relationship with money experience hard times in their life at a point due to their unwise decisions. As noted below are some smart money lessons that can back your financial decisions, so that you won’t become a victim of Bankruptcy.

Avoid social comparison

Someone well said ‘comparison is the thief of joy’. People are eccentric with the idea of having everything to uplift their social games. Even if they don’t need it. That’s where they put all their money and end up being broke.

There is no reason to risk what you have and need for what you don’t have and don’t need.

Having a crystal clear financial goal is crucial to support all your money decisions. Going after things that don’t add any value to your life, is money wasted.

Confounding compounding

Compounding is the secret to wealth. The statement can be verified with the life of Warren Buffet. You shouldn’t be loaded to create tremendous financial yields.

For compounding — a little growth serves as fuel for future growth. By giving enough time to your right investment, extraordinary results are guaranteed even by defying logic.

Good investing isn’t the highest returns but the consistency of returns over a period.

The bright side of compounding is stupendous results but the downside is the patience.

Getting vs. staying wealthy

You can get wealthy by chance, but you can’t stay wealthy by chance. The secret of staying wealthy is a combination of frugality and paranoia. With frugality and paranoia, the tendency of screwing up things weakens.

Getting money is one thing.

Keeping it is another.

Good investing isn’t consistently making good decisions, it’s about consistently not screwing up. Planning is often important but what’s more important is to plan the unplanned.

Focus on the broader picture

You necessarily don’t have to be right all the time, just a few big moves are enough to change the whole picture. Everyone makes investing decisions but only a few master the art of controlling their losses.

You can be wrong half of the time and still make a fortune.

All your investment decisions ain’t going to skyrocket, and it’s completely fine. Only a couple of decisions should escalate to outweigh all the losses.

The show-off game

Driving the coolest car, wearing the most expensive brands, and jewelry, and having exotic vacations for the sake of social acceptance are probably the dumbest things to do.

Nobody acknowledges you for driving a Lambo rather people admire their idea of being in the driving seat.

No one is impressed by your possessions as much as you are.

Being inspired by the idea of acquiring subtle recognition by driving fancy cars may bring less of it. If you seek respect and admiration, choose humility, kindness, and empathy over these materialistic facades.

Wealth is what you don’t see

Money has many ironies one of them is wealth is what you don’t see. You may be wondering if the guy in the Ferrari might be super rich. But you can’t digest that the car comes with a huge EMI over the head of the owner. Maybe that is all the money he has.

So we rely more on outward appearances to gauge financial success.

The best way to lose money is to show people to have enough of it.

Modern capitalism has glamorized the philosophy of ‘fake it, till you make it’. But the real wealth is the fancy car not purchased, a mansion not bought, the expensive jewelry not worn, etc.

Save money

The concept of wealth generation pays much attention to income and investment returns, overlooking the savings rate. Investment returns can generate huge wealth.

But whether an investment strategy will work and, the market will cooperate is uncertain. But saving money from whatever is left with strategic planning will certainly serve you in the long run.

Investment is fueled by saving; perhaps you can accumulate wealth by investing, but you can’t invest without saving. The rate of your savings isn’t proportional to income but to humility.

Making sound financial decisions is key to survival. And you don’t need a specific reason to save. Avoid buying things you don’t need with money you don’t have to impress the people you don’t like.

Comment and let me know what mistakes you have made with your money till now.

Thank You



Abhinav Rai

Penning down my unsolicited opinions based on my personal experiences ... Self-Help | Books | Mental Health |