Three Money Decisions Shape 90% of Your Financial Life, Says CA — Most Indians Miss All Three
Housing, retirement savings, and insurance are the pillars of financial stability
Experts warn that poor choices in these areas can derail long-term wealth and security
By Our Business Reporter
New Delhi, January 8, 2026:
Financial experts are warning that three critical decisions — housing, retirement savings, and insurance — account for nearly 90% of a person’s financial life. According to a Chartered Accountants (CAs) most individuals in India fail to make the right choices in these areas, leaving them vulnerable to debt, inadequate retirement funds, and financial shocks.
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With inflation rising, job markets shifting, and healthcare costs climbing, these three decisions are becoming more important than ever.
The Three Decisions Explained
1. Housing: Buy vs Rent
- Impact: Housing is often the single largest expense in a person’s life.
- Mistake People Make: Many rushes into buying property without considering affordability, location, or long-term financial impact.
- Expert View: Renting can sometimes be smarter, especially in overpriced markets. Buying should be based on stability, affordability, and long-term goals.
2. Retirement Savings: Start Early
- Impact: Retirement planning determines whether you can live comfortably after 60.
- Mistake People Make: Most Indians start saving too late, often in their 40s or 50s.
- Expert View: Starting in your 20s or 30s allows compounding to work in your favour. Tools like NPS, EPF, PPF, and mutual funds are crucial.
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3. Insurance: Protect Against Risks
- Impact: Insurance shields families from financial shocks like illness, accidents, or death.
- Mistake People Make: Many buy inadequate coverage or mix insurance with investment products.
- Expert View: Pure term insurance and health insurance are essential. Avoid expensive endowment or ULIP plans unless they fit specific goals.
Why Most People Miss All Three
- Cultural Bias: In India, property ownership is seen as a status symbol, leading to rushed purchases.
- Short-Term Thinking: People prioritize immediate expenses over long-term retirement planning.
- Lack of Awareness: Insurance is often misunderstood, with many treating it as an investment rather than protection.
- Financial Illiteracy: Studies show that less than 30% of Indians are financially literate, contributing to poor decision-making.
Impacts of Poor Decisions
- Debt Trap: Overpriced housing loans can consume 40–50% of monthly income.
- Retirement Crisis: Without early savings, retirees depend heavily on children or government pensions.
- Financial Shocks: Lack of insurance forces families to liquidate assets during medical emergencies.
Global Standards and Comparisons
- USA: 401(k) retirement plans and mortgage rules encourage early savings and careful housing decisions.
- Europe: Strong social security systems reduce dependence on personal savings, but housing choices remain critical.
- India: Weak pension systems and rising healthcare costs make personal responsibility more important.
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Expert Opinions
- CA Rachit Sharma: “If you get housing, retirement savings, and insurance right, 90% of your financial life is sorted.”
- Policy Analysts: Stress the need for financial literacy campaigns to help Indians make better choices.
- Wealth Managers: Recommend starting retirement savings by age 25 and reviewing insurance annually.
Conclusion
The message is clear: three decisions — housing, retirement savings, and insurance — shape your financial destiny. Most Indians miss all three, but with awareness and discipline, individuals can secure their future.
As India’s economy grows and living costs rise, these decisions will determine whether families achieve financial freedom or struggle with insecurity.
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