Common Money Vices You Should Avoid
Mastering personal finance is a bull everyone wants to grab by the horns. Every professional, student, mom and freelancer in Singapore wants to understand how they can best manage their money. We’re sure you do too.
Wouldn’t it be great if you knew which investment would reap the most reward or which card is the worst in the long run? Wouldn’t it be miraculous if you never run out of money a few days before a payday or if you always have enough to pay for rent? Wouldn’t you be golden if you knew how to save or what retail products are worth spending a bit more on?
Unfortunately, money management is such a broad and complicated topic that it’s best understood in increments. A good place to start is where most people go wrong. What are the most common money mistakes that people consistently make? Most of these are unknowingly done, so you end up doing them repeatedly until they become vices that are hard to run away from.
Through this article, we hope you will better understand these common money mistakes, so you can avoid them and, in turn make better, financial decisions.
Driving a private vehicle
Although this is not as big a problem in Singapore as it is in other Asian countries, private transportation cost still takes a significant chunk out of your budget. Not only are you paying for gas, you’re also racking up costs for parking, and parking in Singapore’s CBD can be expensive.
Instead of driving your own car, why not try taking the train or a bus? It passes through every major district in the city, and it’s affordable. You even have some time to read, catch up on work or listen to music while you travel.
Indulging in everything
When you start to earn, it’s easy to forget what it felt like when you’re barely making ends meet. Suddenly, the days in college or between jobs, when you were scrimping, are so far away. You’re tempted to indulge every ephemeral pleasure.
While there is nothing wrong with wanting to reward yourself, be selective on how you do it. Assess whether you prefer dining out or getting that new bag, whether you need to replace your laptop or party at a club. Narrow down the indulgent items or experiences that you want– at most 3 – and purchase them with pride. Hold back on the rest. That way, you would not feel deprived while still protecting your bank account.
Everyday take outs
Have you ever tried to compute how much money you spend on a cup of coffee and lunch? A lot. People rarely notice because $12 every day does not seem like much, but this is a symptom of a bigger problem. Many Singaporeans instinctively spend on non-essentials with much cheaper alternatives without blinking an eye. It has become normal.
What these $12-coffee and work lunch do not show is how they become $264 a month and $3,168 a year. Imagine how much you’d save if you brought your own cup of coffee and lunch to work every now and then. You can even try to prepare batch meals over the weekend, so you’re not pressed for time to cook them during the week.
Who doesn’t have a credit card these days? Even college students do, and while that’s good because it helps you build a credit history, it’s also one of the biggest temptations the finance industry has created. Spending money that you don’t have and will not physically pass through your hands often lessens the accountability towards those purchases. That’s why it’s so easy to go crazy, shopping at Orchard Road, with your credit card than with cash.
It so easy to make this mistake, especially when you’re only starting to use a card or when you’ve recently upgraded it. Hold yourself accountable by setting a limit to your charges. Constantly maxing out your card is not good for your credit score or your money habits.
While you may think this is a bit out of place in a personal finance article, clothes take a significant part of a person’s budget. Observe how crowded malls are when the biggest brands, like Forever 21 and HnM, are on sale and how quickly these brands turn over styles. There’s always something new to try on, and it’s so easy to get sucked into that, thinking they’re relatively cheap items.
Over time, these “cheap” pieces accumulate to a lot of money that people don’t notice spending. What’s worse is seldom are these items of good quality. They were made to be worn now, not every day, so people are sucked into the cycle of buying more to replace the clothes that are now ripped, faded or bobbling. It’s the worst version of retail therapy.
Instead of buying clothes that don’t last, invest in good quality items that may be a bit more expensive up front but will last you a long time. In the long run, you’ll save a lot of money.
Why do people repeatedly make these common mistakes?
Let’s be honest, they’re vices for a reason.
People grow accustomed to making these mistakes because they’re easy. You can justify a $5 coffee and $7 lunch because you’re not seeing how much it costs in year, especially compared to packed lunches and coffee your brought from home. You don’t think twice about cheap purchases, like fast fashion, or impulse buys because you most likely use your card. You don’t physically see money being transferred, so your brain does not register it as losing money.
The common denominator among all these money vices is your mindset. People who look at money as a short-term resource often spend like they will always have it – without safeguards or plans. That causes them to consistently spend on unnecessary expenses.
Don’t let yourself fall into the same trap. Set your financial goals, figure out how you’re going to achieve them and adjust your day-to-day spending, so it reflects those goals.