5 Most Common Spending Mistakes

 

Times are hard, and most households are grappling with escalating costs of goods and services in addition to more bills. Every new day seems to come with new challenges and as a household owner; you have to come up with unique strategies to meet all financial obligations.

One way to enjoy a good quality of life even when finances are tight is, of course, managing your spending. While this is common knowledge, it is something everyone struggles with. Making smart money choices every day is not easy. Even with the most well thought out budget, you will still find yourself facing cash shortfalls every once in a while.

Surprisingly, financial advisors assert that it is possible to live within your means and still enjoy life. How so, you might ask? It all boils down to avoiding common spending mistakes. A 2014 survey published in the USA Today lists poor purchasing and investment decisions among the top 5 financial problems Americans face.

If you can avoid some of these spending mistakes, it means you will be on the path to a better quality of life. Well, they say that you can only manage what you know and it is, therefore, important to identify these purchase mistakes to plan ahead and avoid them.

Below are some of these major mistakes that you should avoid:

1. Frivolous/ Excessive Spending

One of the greatest financial weaknesses in American households is wasteful spending. In most cases, a lot of money is spent to keep up with the Joneses. This occurs in close-knit neighborhoods where families know each other intimately. You will find yourself always planning to buy stuff not because you need it but because you have seen your neighbors do it.

Now that your friends are going out for movies, you will find it appropriate to do the same yet watching movies at home was always your family thing. Stocking your home bar with top-quality Scotch will make you popular among your friends but what value does it bring to your life? It might not seem like a big deal, but remember, great fortunes are lost one dollar at a time, and before you realize it, you will already be deep in debt.

2. Taking Too Much Debt

If there is one thing Americans love, it must be debt, and now that it is getting even easier to borrow, the situation is getting out of hand.  Almost every household has multiple credit cards which mean there is a lot of debt to repay. As a household owner, you have to consider the actual cost of the debts you are piling up.

Every time you use your credit card, remember that’s an amount you have to repay with interest. Today, consumer debt levels in the country are at an all-time high, almost level with the situation during the 2007/2008 recession. If you are deeply in debt; it is time to stop and reassess your finances. This is a spending habit most people don’t consider until they are too deep in the hole. Start minimizing your debt today before you totally ruin your credit score.

3. 1^st Generation Technology

   

While most people are complaining about financial hardships, you find it surprising that when Samsung or iPhone release their latest gizmos, they are quickly snapped within a few days. The iPhone and Samsung Galaxy are some of the most sought after gadgets and users always line up to upgrade from their last device.

 

Well, with the fast paced rate of technological innovation, you will always be forced to be on the lookout for the latest hardware and software upgrade. This will cost you a lot of money yet what the tech companies are doing is just tweaking the older devices to make them more appealing. Most iPhone users, for instance, will tell you that the upgrade from say iPhone 5 to 5s was not something worth investing.

This also applies to other technologies you are being lured into buying ostensibly to improve your life only to realize you need to invest heavily to get such benefits. It is true that the electronic car is clean but do you really want to pay the cost associated with running it as an early adopter? Does an overhaul of your existing HVAC system really make any savings? It is true new technology is important but make sure you consider the actual cost.

4. Falling for TV Adverts

Television has to be one of the most deceptive marketing tools. While there are many good products being advertised on TV, there are others which are hyped to play on your emotions. Modern marketers are masters in human psychology, and they know everyone loves a bargain.

You will, therefore, find everything being described as an incredible offer; from cruises to the Bahamas to the latest kitchen oven. From weight loss miracle products to money-back guaranteed services, you will always find a product or service targeting unsuspecting buyers. Before jumping for your phone to grab that deal, take your time to do your research.

Look at the terms and conditions (T&C) carefully, and most likely, you will find hidden fees for shipping and handling. Unscrupulous service providers use television because they know viewers trust this medium and indeed, very few people countercheck the information provided. This is a spending blunder you can avoid by doing due diligence any time you want to shop and always reading between the lines.

5. Shopping for Trends

According to AARP, Americans spend over $250 billion on clothing and trendy accessories every year. This is despite the fact that most buyers are not financially stable. One of the greatest spending mistakes you can ever make is to shop for trends. Retailers know everyone wants their products and they will have a high price tag to recoup as much money as possible. Unfortunately for you, the trend will come to pass, and you will be back in the market in a few months.

These seemingly minor mistakes can ruin your finances. Before you know it, you will have multiple debts to shore up your lifestyle. This is always the first step towards total financial destitution. Luckily, you now know the pitfalls to avoid and how to do it.

In the current financial environment, it is not easy to find a quick solution in case you have a cash shortfall. Your bank or credit union might not be too eager to fund your emergency. This is where a title loan from Bay Area Title Loans comes in handy. These loans are easy to apply for, flexible and tailored to meet your financial situation. Go on and call or visit their website to learn more.