Life is full of unexpected twists and turns. Whether it’s unexpected job loss or sudden illness, unwanted expenses can arise any moment. This can lead to financial ruin for those people who thought they could handle financial planning “later”.

There is a saying in Hindi that translates to “What is the point of digging a well when the house has caught fire.” This is an apt saying for people who start panicking when they are faced with sudden financial crunch. Not having a sound financial plan in place can make you push the panic button during times of crisis. And this panicking can lead to financial ruin.

Some years ago, I was also faced with a similar situation when I quit my job and started a venture on my own. While I was employed, I enjoyed the safety of company-sponsored health insurance that offered medical coverage. Despite being an insulin-dependent diabetic, my employer’s policy offered me coverage for some of the treatments. I thought I was saving money by not having a backup insurance plan, but reality was different.

The moment I quit and started looking for a health insurance policy that would give me the same benefits, I was turned down by almost every insurance company. They refused to offer me similar coverage, leaving me exposed and vulnerable. In trying to save money, I had overlooked the importance of securing a backup plan when I still had the chance.

That one delay taught me the true meaning of financial planning and the high cost of panic-driven decisions. And that is one big lessons that I would want to pass on to the youngsters.

Treat this blog as a source of financial literacy as I tell you how panic-driven decisions lead to financial ruin. I have written more lessons in my book, The Price of Ignorance: A Financial Wake-Up Call. It’s a good idea to refer to that book after you are done reading this post.