Every month, we try very hard to save money. But in the end, we see an empty purse and start relying on a credit card or borrowing from friends or relatives to cover those finishing days. It is a very common thing that happens in every middle-class home.
Has anyone ever tried to figure out the reason for this? We don’t, because we justify it because of sudden expenses or a birthday party or something else. Now, it is time to think and realize what are the simple mistakes we are making that lead us to poor money management.
Impulsive Buying during Sales
Most of us lose money in purchasing unnecessary things during sales. Whenever we hear of “Diwali Sales” or “Big Billion Days” we get ready with our credit cards. It is fine to buy what is necessary, but we won’t stop there. In the anxiety of buying at less cost, you buy more actually what you need. Next month you get a credit card bill to pay this much amount. But your wallet doesn’t have and you do partial pay.
That’s it, you end up paying more in the form of interest. So, it is always better to ask yourself before making the purchase, is the thing required now?
Upgrading gadgets too often
This is mostly for tech-savvy people. Every day new launches tempt you to own the product. Just ask yourself is your existing gadget dead? If not think about the reasons to upgrade and calculate how many years you used your gadget. If you are upgrading before one year time, it is a wrong spending habit. It is better to use a gadget for more than two or three years. Changing the gadgets regularly will show a great effect on your budget.
Lifestyle inflation
We know inflation is one of the dragging factors that affect our finances. Apart from the nation’s inflation, when you checked last about your lifestyle inflation? Yes, some simple changes in your lifestyle affect your finances.
We always spend more when we earn more. It is like a direct proportional ratio. But we never think about saving from the extra money we getting. Rather we go on buying luxury items like having a car, dining at rich restaurants, buying an iPhone, etc.
It doesn’t mean don’t enjoy, it means at what cost you are enjoying. You have to check where are you leading with these choices. If you are wealthy enough no one stops you from doing all. It is all about responsible purchasing.
In my view, a sweet home means, making beautiful memories with family in your heart and plenty of money in your pocket.
Getting convinced with Upselling
Upselling is a great tactic marketers use to convert a single opportunity into two. We go casually to buy a “churidar” or a “shirt”. But sometimes you end up buying two to three, in the name of offers.
At present, you may need only one churidar or shirt, they may cost around 1000rs but you will get an offer to two at the cost of 1500rs. You go for two churidars or shirts and end up burning an extra 500rs. You spend an extra 500rs without necessity. It is one of the important financial habits to avoid. These small leaks can amount to a big number as a whole. So, you should be mindful while utilizing offers.
Ignoring small investment options
A big mistake everyone makes is neglecting small investment options. Some people think what can a 500 or 1000 make a difference? But it is a wrong perception to avoid. If you can choose the right investment options to save those little money, one day they can save you from sudden financial jerks. That small amount may not make you rich but it can make you stand firm in a financial crisis.
Buying Liabilities
The common mistake everyone makes is buying liabilities in the form car or building a house. It is not wrong to have a car or a dream home. But you should be aware of how to plan smart and not get stuck in debt. Most people buy a car or start a house without having a single penny in hand and end up paying EMIs for years.
By taking the car as an example, we decode some finances.
A person went to buy a car at the rate of 10 Lakhs paying 50% down payment and remaining on EMI. The rest of the amount can be cleared within 5 years with minimal interest and EMI. In the other case, a person bought the same car by opting to a car loan with 9 years EMI period, without paying single penny. In this case, he has to pay a lot in terms of EMI and interest. By comparing these two scenarios, you can understand how not to take financial decisions.
Ignoring Insurances
Insurances are great shock absorbers in financial crises. If you do not have health insurance or term insurance, you may lose a big. Just imagine, you feel sick and are admitted to the hospital. To your shock, you need urgent surgery to be done. In this situation, if you don’t have health insurance you need to pay from your pocket or take debt from others.
But if you have opted for a health insurance at a minimal cost, you don’t need to take stress. So, it is always better to opt for at least health and term insurance. A little premium today can save you from debt-trap.
Quick Commerce Effect
With the boom of quick commerce, everyone using them widely without knowing how they are affecting finances. It is always good if you are using it for necessary things that save for you.
Just take a scenario, if you have a good grocery store near you then what is the need to use quick commerce apps? I think useless. It is better to visit the store and purchase what you need. By doing this, you can save from GST rates by not opting for quick commerce. The next big thing is emotional buying on the apps by attracting to the offers. Even though they save you money, in emotion you purchase more than you require. In the end, you spend more on the apps. You can use different Chrome extensions to know how much spending on quick-commerce apps.
Overlooking maintenance
A simple mistake everyone makes overlooking small maintenance repairs. If you act today that minute repair may end at minimal cost. But if you neglect it, a small repair can lead to a big issue. It makes you pay more than at the beginning you identified. So, it is always better to keep a monthly check on your vehicles, gadgets, and home appliances. By doing this, not only you save but also the lifetime of appliances will increase and energy costs will come down.
Not tracking expenses
Last but not least, not tracking the expenses is the biggest mistake everyone makes. If you are not able to know what and where you are spending, it leads to budget leaks at a huge cost. It is always a must to prepare monthly budgeting to plan accordingly to save money. If you don’t track the expenses means you never hold your money tight. Tracking expenses will help you to cut down on unnecessary costs.
Real meaning of saving money
Saving money is not about sacrificing your enjoyment and luxury. It is to keep a check on the mistakes we are making on unnecessary things that don’t add value to us and in return affect our finances badly. It is always better to be cautious while spending rather than feeling why I made this purchase without any use. Saving that small penny and investing in the right options can bring you the fortune of a lifetime.