Earning money is easy enough (well, for some). Managing it, on the other hand, is a task not many can master. Saving money and sticking to a budget can be quite a challenge especially if you are prone to spending cash as soon as you get your hands on it. Money mistakes might end up losing a lot of value of your hard earned cash.
Listed below are 7 such money mistakes you might be making, and the ways you can avoid them.
Deposits in Online Wallets –
Online wallet and payment processing services like PayTM, Amazon Pay are changing the face of e-commerce today. No longer do we have to deal with hard cash; digital money has simplified life beyond belief. However, on the downside, online payment gateways do block the flow of money. The unused money left in your e-wallet does not give you any interest, unlike when you keep the money in a bank. Moreover, these platforms (PayPal included) are not insured by the FDIC certification. It is always advisable that you keep a minimum balance amount in these payment gateways, transferring all the main funds to a savings account.
Keeping Cash in Your Home –
An independent study by the American Express Spending and Savings Tracker revealed that more than 43% of Americans prefer to keep their savings in cash rather than invest it in some lucrative schemes. Moreover, about 53% of these people tend to keep cash in their homes and not deposit it in the savings account. The two direct disadvantages of these choices are:
- Your money is not safe; it can get stolen or misplaced easily at home, unlike in a bank where your deposits are guarded with the most advanced security system.
- You lose out on the interest – the biggest advantage of keeping your money in the bank is the little amount of interest you get every month out of it. Although minimal, this extra amount is still better than not getting anything at all.
Unused Gift Cards and Coupons –
Discount coupons and gift cards have been a major marketing tool for several brands that want to promote their products and expand their customer base. However, not everyone uses gift cards intelligently. Every year, thousands of dollar worth of gift credit is lost because of misplaced or expired coupons. The technical term for this financial bleed is “breakage” when the companies are profited from unused coupons. Niche coupon code databases leverage this breakage model to offer highly valuable coupons to a targeted audience. It has been estimated that between 2005 and 2011 there was a loss of over $14 billion dollar worth of gift cards just because they were never redeemed.
Compare Before You Buy –
People are now more interested in buying things online and the e-commerce market is booming because of the comfort and discount online portals offer to consumers. If you’re one of them who loves to shop online then this tip is for you. If you research well before you buy anything online you could save some bucks. The CEO of MR10.in, a list reviewer brand of India revealed that “The research and our filtered list helped thousands of customers to save their money and finding the best items for the long run. Thus they don’t waste money on low quality and expensive things instead they get the same value for lower money.”
Investing in Gold –
Investing in gold can be quite a great idea if the market conditions favor it. However, during an economic recession or depression, investing in gold or property might not be a good idea because these sectors are highly volatile and prone to heavy gains or loss. Contrary to popular belief, converting your money into gold biscuits isn’t always the best way to safeguard its monetary value. The increase in investment in gold also contributes to inflation as there is a shortage of currency in the market. Gold lacks utility; the people investing in gold are more speculating rather than investing.
Also read – Protect your Family Future with Term Insurance.
Credit Card Fees and Other Expenses –
Ask yourself; are you heavily dependent on credit cards when out shopping? It is a great way to pay for things that we otherwise cannot afford because we’re awaiting the payday. However, it comes as a bit of a shocker when we see the bill at the end of the month. It is best that you avoid swiping the card unless it is an absolute necessity. Even if you do swipe the card for payment, make sure that you have the full funds to pay the amount by the due date. There are many retailers who try and lure customers using the free shipping/ zero interest EMI schemes, but it just a trap to compel users to buy more than what we actually need.
Unused Subscriptions –
There are a lot of things that we just impulsively sign up for and then forget about for the whole year. Gym membership often falls under this category. According to a report by Statista.com in 2014, 76% of households that have an average income of $100,000 or more spend $500-$999 on gym memberships and fitness centers. The study also shows how almost 2/3rd of the people who sign up for these gyms never end up actually using it. Then, 25% of the members are inactive after the first 6 months itself! Be very careful when you are subscribing to any paid-membership of any sort, go for it only if you really intend to use it all through the year.
Final Thoughts –
Consider these suggestions in isolation, and you’re right in questioning the quantum of benefit they’ll bring. Capture the financial discipline lessons in these suggestions and you’ve got a lifetime of smart choices ahead.
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© Dipika Singh. Unauthorized use or duplication of this material without express and written permission from this site’s author is strictly prohibited. Excerpts and links used, provided that full and clear credit is given to Dipika Singh (Gleefulblogger). With the right and specific direction to the original content.
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