Buying now, Paying later
Being able to pay something off isn’t the same as being able to afford it. That big flat screen TV you pick up today comes with a heavy price tag tomorrow. Ask yourself if you really can’t do without and try to only purchase when you can afford to pay in full.
Not eliminating recurring outgoings
You’ve got that membership and hit the gym hard. On January the 1st. Then never again. Yet the monthly fee is being debited out of your account every month. You only ever use the internet on your phone sparingly yet that “Unlimited Data” add-on to your phone contract is sucking funds out of your savings account each month. You have 1,400 TV channels plus the latest live sports and movies to choose from but you’ve rarely ventured past channel 5 and watch the sports at the pub. These are all extraneous recurring payments. An easy way to begin saving more money is to identify and eliminate these unnecessary cash sucking outgoings from your life.
Buying too big
You’re single with no Kids and you live in the city. Do you really need that 4.2-liter V8? A more compact car will often save you buckets- not just on upfront cost, but on taxes and fuel costs. Remember that cars are depreciating assets. If possible, try to avoid paying in installments and consider shopping around for used models.
Paying first, and saving later
Many people typically think of buying their luxuries first, and then saving whatever is left, assuming that they’ll be making more as they get older. The financially prudent save a set amount first, and then spend whats left over frugally. That way they always have a backup plan should things head south later in life.
Not cutting out convenience spends
You’re on the way home, a little thirsty so stop off for a bottle of water at the shop. Your wallets now lighter but you haven’t got anything you didn’t already have at home if you could just wait a little longer. Over the course of months and years these costs add up.
When it comes to food it pays to shop around. Buying things like non-perishables in bulk will usually save you greatly in the long run. When you have the choice between a prepared sandwich and the ingredients for sandwiches you can often save half your money or more and get a lot more bang for your buck buying large. The same goes for a small can of drink, vs the equivalent bottle of drink
Paying through the nose for brand recognition
When it comes to groceries you may will often save money ‘downgrading’ to the supermarkets own brand without noticing any discernible loss in quality or taste.
Using credit cards excessively
Avoid paying for daily expenses like petrol and snacks with credit cards. Fees can quickly add up
Even a basic budget is better than none, and having one will give you a birds-eye view of your incoming and outgoings and allow you plan effectively.
Not opting in to employee pension matching
Many companies will match employee contributions in the workplace pension scheme. By 2018 all employees are legally required to match into the scheme. The more money you put into your pension early on, the more comfortable you can live later on in life. If you have not opted in (or are saving only a trivial amount) you are effectively refusing free money.
In the comment section, let us know people’s other financial mistakes. If you are looking for a free financial planning consultation with us, please book an appointment here.