Managing finances sometimes feels like walking on a tightrope, as every wrong financial decision will have an impact on our long-term stability. Sometimes, we focus on big expenses and ignore smaller expenses, and at other times it’s the other way around. Then there are those bad spending habits that are unnoticed and the damage they cause to your financial health.
Hidden financial traps that could quietly erode one’s financial well-being are a common problem, so they have to be brought to light. It’s also vital to bring up solutions for them, whether it’s setting a budget, cutting spending, or asking for help from money lenders.
Let’s say you’re wandering around the mall after lunch between work breaks and saw a dress at a massive discount. Suddenly you bought it, thinking that such an opportunity would not come a second time.
Impulse buying is a common shopping habit that doesn’t feel like it has a big negative impact on your financial well-being. But if you do it frequently enough, it will certainly cause significant money-related stress in the future. This desire for instant gratification will be detrimental to your long-term financial goals, which take time and patience to build.
You can combat this by creating a monthly budget and sticking to it. When tempted to make an impulse purchase, give yourself time to calm down. If you still want the item after a day or two, consider double-checking your budget first before buying it.
Obsession with subscriptions
Amid the hustle and bustle of modern life, comfort and efficiency are highly sought-after commodities. Living in an era where time is very important, the demand for more convenient solutions continues only increase. This trend is undoubtedly successful in improving the quality of our lives in many ways. As a result, this era has become known as the “Convenience Trap.”
One of the most common manifestations of the Convenience Trap is the proliferation of subscription services, from streaming platforms Netflix and Spotify to meal kit delivery and subscription boxes for every miscellaneous that you might want.
At the same time, while these affordable services make our lives easier, they are many and have recurring costs. As a result, we underestimate the actual money we spend on them. They may not seem much individually, but when you add them all up, you might be surprised at how much your bill actually is.
Before subscribing to a service, try asking yourself if the service will help improve your life. If a subscription has a free trial, try it first before committing to a subscription. Second, are there alternatives or ways to make them more cost-effective? For example, Netflix offers group subscription plans with family or friends to split the cost.
You should also review your subscriptions periodically and don’t hesitate to cancel them if you don’t use them much. Lastly, don’t forget to utilise a budgeting app to track your subscription spending. Money lenders in Singapore may offer personal loans to consolidate subscription-related debt, making it easier to manage.
Eating outside frequently
There are many reasons for ordering food outside. Some eat out because it feels good to do so, some have become bored of home-cooked food, and others don’t have time to cook and opt for instant food delivery online because of how fast-paced life has become.
There’s nothing wrong with occasionally enjoying a meal at a restaurant or pampering yourself with delivery. But have you considered that relying on this option too often could have a major impact on your finances?
The cost of eating out or having food delivered regularly can add up quickly, often exceeding what you spend on groceries for home cooking. Plus, takeout and restaurant meals have taxes and tips. Takeout becomes even more expensive when you have the food delivered.
There are also food delivery services that offer membership for a small price. But within a year, the amount will add up to more than $15 per month. So if you’re not ordering a lot, don’t get it either. At the same time, you’ll lose a lot of money if you order a lot, so you shouldn’t do that as well. And if the membership is making you feel that you have to spend a lot on delivery, you should unsubscribe.
Misuse of credit cards
Credit cards offer convenience, flexibility, and rewards. At the same time, these advantages of credit cards become traps to irresponsible users. They make impulse purchases and only make minimum or small payments, so they end up with high-interest rates and an ever-increasing total bill.
To avoid such a problem, set a monthly spending limit on your credit card and stick to it. Focus on rewards that match your regular spending and track your credit card spending in real-time using mobile apps to avoid overspending.
Also, pay more than the minimum amount on your credit card bill to reduce interest costs and pay off debt faster. Create a repayment plan that focuses on clearing high-interest debt first. Money lenders in Singapore may offer debt consolidation loans at lower interest rates to simplify repayment.
Stop hurting your financial health
Impulse buying, excessive subscriptions, or credit card misuse are common bad spending habits that insidiously damage your financial health over time. But as long as you’re doing your best to improve the way you spend money, it’s never too late. Recognising these habits and taking steps to overcome them is an important first step to regaining control of your finances.