Everyone would like to save a little here and there. But some common decisions can result in you spending more money than you intended, over and over again.
1.- Using cards too much.
Cards are a very convenient way of buying things. Too convenient, if you ask me. When we use cards we’re less able to keep track of what we’ve bought. We don’t have a certain number of notes and coins to keep track of. And we’re more likely to splurge when we carry more in our accounts than we do in our pockets.
Try and leave the house always with the money you need and only bring the card out for big purchases or if you see something genuinely too cheap to pass up, that just happened not to be on your list, like a reduced price lamb’s leg.
2.- Virtual over real money.
In a similar vein, we have a hard time conceptualizing real over virtual money. We often accidentally think in terms of our net worth rather than our spending money. We think we have £400 of eBay stock on sale, so we have £400. We think our paycheck is £2000, so we have at least £24000 this year.
Any money that isn’t right now in your bank account or home is not real. That paycheck you’re getting doesn’t exist. If it’s delayed or your company goes bankrupt you might not have it for a very long time. Think in terms of what you have right now, not what you could have.
3.- Physical over virtual media.
On the other hand, we place too much value on physically possessing something. Even when that thing is not really something you hold in person. Everything from films and music to cards and guides, we like to have the thing in our hand rather than on our screen.
But most of these things can’t be used without putting them into some sort of a device anyway, degrade over time and are often more costly. Get your media cheaply, digitally and make it go much further.
4.- Not negotiating.
More a problem that Brits and some Americans suffer than anyone else, but: we just don’t negotiate! We pay fixed price for everything every time and then bemoan it when we find it half price online two days later.
A bit of a haggle is good for the soul and most things can be haggled down, especially in small stores and online shopping. Just asking for a discount via email can result in coupons and reimbursements, so don’t be scared to ask for a little off, especially on big purchases.
5.- Fallacy of sunk costs.
It’s all too easy to fall for this one. We’ve already spent so much on this renovation project, making this dress or planting the garden that we “may as well” throw another pile of money at it and try and fix it. And then we end up spending more money on our cheap way out than we would have spent buying the items anyway.
If something just isn’t working, you’ve spent twice as much on it as you would have spent on the alternative and it looks like it will still cost more, cut the costs and buy the alternative.
And those are my top five common money mistakes that we all make and that can cost us a lot over the year.
TTFN and Happy Hunting!
What money mistakes do you fall for? What traps do you take pride in avoiding?