Common money traps even smart people fall into

Managing cash flow is vital to financial success, since most of us don’t win the lottery and have a lifetime stream of income coming in automatically every January. We work hard for our money and want to make the most of it.

Here are spending mistakes to avoid to help your cash stretch farther:

  1. Buying Things on Sale.

You may wonder why buying things on sale is a mistake! You might even ask, “Isn’t that a smart money?”

Sales actually can be a huge money waster. No matter what the price is or what a great bargain you got, if you purchased something you aren’t going to use, you just threw away your money.

I’ve purchased so many “bargains” at department stores or discount stores over the years that either weren’t really my style or didn’t go with anything else I had in my closet. Don’t make that mistake!

Tip — Ask yourself, “Would I be this excited about this purchase if it weren’t on sale? Would I buy this at full retail? Will I use this — a lot?”

Then and only then decide to make the purchase.

  1. Buying Stupid Things.

Have you ever purchased an ashtray on a stand since you thought it might make a good planter?

Have you ever bought a convertible sports car (which was way too small) followed by a sedan (which was way too big)? I have.

The plant stand went to charity, and the cars were sold and replaced with more sensible models. However, I’d love to have the money back from all the illogical and strange purchases I have made over the years.

Tip — Hold onto your wallet. Since we are all human, we are going to make mistakes, it’s part of life. Just try your best to limit them by having criteria for purchases — especially big ones.

  1. Throwing Money at Problems You Can’t Solve with Money.

Do you know what makes your skin glow? Though I am not a dermatologist, I have found that exercise, spending a few minutes in the steam room at the gym, drinking a ton of water, getting a good night’s sleep and drinking nutrient-rich carrot juice works wonders for the complexion. Does an expensive skin cream help? Maybe, maybe not.

When you are feeling low, tired or sad, does online shopping make you feel better? Maybe. But so does calling a friend, walking around the block and petting your dog.

Tip — Stop and think if you are trying to solve a “problem” with a purchase. Ask yourself if there are other things you can do instead throwing money around.

  1. Not Spending When You Have an Opportunity.

Why work so hard if you aren’t going to spend your money on what can add great value to your life? A few years ago, some dear friends of ours were married in a fifteenth-century cathedral in Alicante, Spain.

Guess who wasn’t there? Us!

At the time, the expense of the trip hindered us from going. In hindsight, it would have definitely been worth it.

Tip — Spend money on the important things.

  1. Not Spending Enough.

Sometimes you think you are being thrifty but end up not getting what you really want.

While buying lower quality may save some money on the front end, those items often end up wearing out or breaking long before their time.  A higher quality item often will last longer and save you money in the long run.

Tip – Buy the highest quality items you can afford (even if you have to wait to get them.)

We all make money mistakes because we are, after all, human. Hopefully by highlighting a few of mine, I can help reduce the number you make.

When all else fails, hold onto your wallet.

Source: Forbes

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