5 Common Money Traps and How to Avoid Them
Even if you consider yourself to be savvy and money-smart, it’s simple to fall into a money trap. All it takes is a clever marketing scheme, and you could be throwing your money away before you even realize what you’re doing. To stay ahead of the game and save yourself from financial turmoil, be aware of these money traps below.
Not Reading the Fine Print
Many people opt for payday loans without knowing about their steep interest rates. Fortunately, there are plenty of providers that offer safe alternatives to payday loans in the form of small cash advances, which are ideal for covering emergency costs. What’s more, their flexible, low-interest repayment terms won’t leave you unable to pay back the money you owe.
Rather than finding yourself drowning in debt because of high interest rates, make sure to shop around and find a cash loan provider with your best interests at heart.
Falling into a Sales Trap
Wow! Buy two computer games and get the third half price, that’s a bargain! But, is it? Would you have even purchased that third, or even second, game if it didn’t have a discounted price tag? Falling into a sales trap is easy if you think you’re saving cash. The reality is, you end up spending more while believing you’re getting a great deal. To avoid those “bargains” that add more numbers to your end total, only buy what you intended to, and no more.
Not Taking Advantage of Rewards, Coupons, and Points
On the other side of the coin, it makes no sense to not take advantage of any coupons and reward schemes your local store is offering. While they’re designed to make sure you choose that supplier over another, they often provide you with significant perks.
For example, some credit cards offer points you can redeem for air travel or vouchers, while many grocery stores give you rewards when you spend over a certain amount. You can then redeem those points for coupons. Since you were going to spend the money anyway, it’s working in your favor.
Not Having a Savings Account
If you have a 401(k) savings account, you may feel like that’s all you need to do to ensure your financial security. After all, you now have a retirement plan. However, what are you going to do if you have a medical emergency in the family, or you need to travel somewhere at short notice?
Without a savings account, you can find yourself relying on credit cards with horrendous interest rates. It can then be a battle to rid yourself of that financial burden in the months to come.
Open a high-interest savings account and start putting money into it each week. Before long, you can have a healthy nest egg to guarantee your peace of mind.
You Don’t Track Your Spending
One of the most significant money traps is swiping your card here, there, and everywhere without thinking about how much you’re spending. Even if the amounts are small, they can all add up over time. Before you know it, your bank account is empty with nothing to show for it. Keeping track of your spending is crucial. If you know you’re too loose with your credit card, take cash out as an allowance and only spend that for the week.
Money traps are everywhere, waiting to gain their next victim. However, if you know how to identify and side-step them before they lure you in, you’re setting yourself up for a far safer and more prosperous financial future.