So you think you’re pretty smart with your money. You have a budget, you’re out of (or are paying off) debt and you read Savings Guide weekly. You’re more money conscious than the average bear and you’re proud of it. You should be- well done! But here’s the thing, sometimes we think we’re saving money when we’re not. Think you’re saving? Think again.
I remember going bonkers in sales… oh yes. The thrill of a “bargain” speaks to my stingy side whilst acquiring armfuls of clothing appeals very much to my inner princess. Sadly, princess won out and I walked away with 2 tee shirts, 2 dresses, 2 pairs of trousers, some earrings and 3 new pair of shoes. Did I need any of them? Well, the trousers yes, they were for work, but the rest, not so much. I had convinced myself that I was actually “saving” but the fact is, if these items were full price I wouldn’t have even considered them.
The Insurance Trap
Insurance is a treacherous terrain to navigate; try it without a map and you’ll surely get lost. Picking the policy with the lowest premium or *gasp* not having insurance at all may seem like you’re saving up front but when the unthinkable happens, you’ll be well out of pocket. Case in point: I never got income protection insurance because I told myself I couldn’t afford it. Then, out of the blue, I got seriously ill and lost my ability to work. Being totally broke is much harder to afford than a few hundred a year, trust me.
I don’t want you to think I’m suggesting we all go out and buy Louboutins, I’m really not, but buying el-cheapo shoes is not the savings plan in a snap it seems to be. Once upon a time, I bought some very cheap shoes. Yes they were plastic but they were oh so cute and really, very affordable. Or so I thought. I wore them to uni when I had a long day of lectures, all on opposing sides of the campus, and by lunchtime I was ready to cut my feet off. The shoes hurt me so much I limped my sorry self over to the nearest Target and bought some band-aids and thongs to see out the rest of the day and of course, I then had to go buy another pair of shoes to replace the original pair later in the week. Total saving? $0.
Paying Off Debts
Us financial types are always on about getting out of debt, so it makes sense to pay off whatever debt you’ve got as quickly as you can. At least, that’s what you’d think. Some loans will actually penalise you with hefty fees for early repayment because they’re losing out on the interest they thought they’d get out of you! Read your contract closely before changing your repayment plan. But of course, you’d have done that before you signed up… right?