Read Online | 4 min read | 10 Sept 2025 | 02:50 pm IST
Avoid working forever by protecting your savings. Smart insurance, disciplined investments, and patience with compounding can ensure your money works for you and your family long after you're gone.
"If you don't find a way to make money while you sleep, you will work until you die," a quote famously said by legendary investor Warren Buffett.
Yet, despite its widespread circulation, many individuals still overlook its core message—especially those far from financial freedom.
Years of hard work can be wiped out by unforeseen financial shocks or poor investment choices, cutting short compounding benefits and forcing individuals to work well into old age. Understanding these pitfalls and taking preventive steps can ensure that your portfolio doesn’t retire before you do—and, if structured well, continues to support your family even after you're gone.
Health insurance: A safety net
A sudden health crisis can drain savings, forcing families into debt and extending work years unnecessarily. Chronic and critical illnesses often require treatment costing several lakhs of rupees, wiping out hard-earned reserves.
A robust health insurance plan is essential today. It's not just about the sum insured, but understanding policy specifics such as coverage limits, bed costs, and claim procedures. Consulting a certified financial advisor helps navigate these complexities and ensures proper protection.
Note: Unlike term plans, health insurance premiums rise with age, claims, and policy revisions—making timely planning critical.
Avoid capital wipeout
Stories of people losing savings in Ponzi schemes, chit funds, or speculative instruments like derivatives are rampant. These lead to job stress, unmet goals, and compromised retirement dreams.
Hygiene tips to stay safe:
Avoid investing based on viral content, reels, or WhatsApp tips.
Scrutinise every investment thoroughly—if it sounds too good, it probably isn’t.
Never allocate more than 5% of your net worth to risky or trending assets.
Work with a registered financial advisor for structured and risk-assessed investing.
Less is more
Charlie Munger wisely said, “The first rule of compounding – do not interrupt it unnecessarily."
Moving in and out of investments basis past performance leads to higher costs, taxes and also chances of staying out of equities in their best periods. Investment changes should take place only if there is a structural reason to do so and short-term underperformance should not be a reason for a change in fund or fund manager.
A case in point: an equity mutual fund that returned 40x in 30 years saw only a handful of investors enjoy the full benefit—proof that impulsive moves break compounding’s momentum.
Lifestyle creep
Lifestyle creep is a term many are unfamiliar with, but it’s something everyone faces as they progress in their careers and lives. It describes how expenses and lifestyle gradually expand with rising income.
The problem arises when income growth slows or stops, yet lifestyle expenses remain elevated. This puts pressure on savings and, in extreme cases, can even erode your capital. Understanding lifestyle creep is crucial—you should aim to let your expenses grow in step with, or ideally below, your income growth to ensure long-term financial stability.
High loans
Taking on disproportionate loans, especially at the start of your career, can severely hinder savings and wealth creation. Loans taken for assets that don’t appreciate or need to be liquidated prematurely often result in financial setbacks.
Many first-time earners rush into buying real estate without considering long-term suitability, only to later sell at a loss when their lifestyle and requirements evolve. Being mindful of loan sizes and their purpose can help you avoid unnecessary debt burdens and better align your investments with your financial goals.
Securing your legacy
Beyond planning for your lifetime, it’s equally important to ensure your wealth continues to benefit your family after you’re gone. Simple actions like creating proper Wills and updating nominations can prevent disputes and ensure smooth asset transfers. For families with substantial assets—financial or otherwise—setting up trusts is a structured way to preserve wealth and create a lasting legacy that supports future generations.
Conclusion
Financial freedom isn’t a distant dream—it’s a habit shaped by informed choices, disciplined investing, and foresight. By safeguarding against risks like health crises, poor investments, lifestyle creep, and excessive debt, you create a resilient portfolio that grows quietly in the background.
More importantly, thoughtful planning ensures your wealth not only supports you through life’s ups and downs but also leaves a lasting impact on the generations that follow. Start today, stay consistent, and let your money work for you—not the other way around.
The article is authored by Vivek Banka, founder, GoalTeller, a Sebi-registered financial planning app.
