Our brains often trick us. Therefore, even a smart person can stumble into financial traps. Finance can easily be used for spontaneous purchases and hasty investments. Let’s talk about the financial traps that are easy to fall into.
‘We only live once’
The phrase is often used after making rash purchases that are destined to lead to serious problems in the future. So people may take out a loan to buy a new phone, pay in instalments and live on credit cards. Although you really only live once, it doesn’t mean that you should spend money recklessly.
Learning about finances isn’t easy; you need to budget properly. The key to managing your finances is being able to understand the difference between what you want and what you need to live. It is necessary to calculate in advance what you will be able to spend on. Remember that living debt-free gives you more freedom and opportunities to save money.
Some sales are an illusion of saving money
Sales are usually a marketing ploy, so purchases are not always justified. Sometimes sales do help you save money: for example, buying out-of-season winter clothes or summer shoes. But what happens if you constantly grab things in large quantities during sales? If you calculate the amount spent, the figure can be huge.
This financial trap is due to the effect of denomination. Our mindset perceives large notes as more valuable and rare, so we tend to cherish them and spend them carefully. The same goes for large sums of money on a card. Small notes and coins seem less valuable because of the smaller denomination. That is why people make unexpected purchases. Before making a purchase, it is worth asking yourself: do I really need it? Or will I buy it just for the sake of a discount?
‘It’s expensive, but you don’t have to refuse it’
Has it ever happened to you that you looked at the price of a product incorrectly and it turned out to be more expensive at the checkout? Many people in such a situation feel uncomfortable and can not refuse the goods. Therefore, there is a risk of spending much more than expected.
If you see that the price is higher than you are ready to pay, you have the right to refuse the purchase without explanations and excuses. Don’t think about what others will think: choose the solution that best fits your budget.
Lack of a financial plan
The main mistake is not having a clear spending plan. When a person receives a salary and sees a large sum on the card, he starts to think that he has enough money to buy everything he wants. This leads to excessive spending on unnecessary things at the beginning of the month, and after a few weeks the person finds himself in a difficult financial situation and has to save money.
To avoid this situation, it’s a good idea to map out a budget and plan your expenses based on your actual finances. It is a good idea to set aside money in advance for rent, utilities and groceries. It’s also important to set aside some money to create a financial cushion and save up. This will help you avoid unpleasant surprises and avoid getting into debt or taking out loans.
In financial matters, decisions should be made rationally. You should not give in to emotions to allow yourself an unplanned purchase. Do not forget that spontaneous spending will bring you momentary joy, and then you may seriously regret your actions.