Financial Traps- Beware Of Them
You can fix brilliant financial goals and start working towards achieving them. But there are few financial traps you should be aware of. Take care that you do not fall in them unaware. Read on to know the list of financial traps:
- Freebies: Most of our buying decisions are easily persuaded by freebies offered. When freebies are offered, we tend to check the price factor. We are attracted to freebies. They are so influential that we imagine them as value additions. When we carefully analyze we can find still cheaper alternatives (or) most of the freebies are things that we do not want. Hence avoid buying things just for freebies.
- Anchor pricing: The best example of anchor pricing is, the real estate broker showing us two homes with quite high rents. Then he shows us another two for which the rent is lower than the first two. Human mindfully captures whatever is offered first. We set the price of the first shown item as the base price. Then we automatically ignore bargaining. In reality, the ones with the low price still have scope for a bargain. So, don’t ignore bargaining based on anchor price psychology.
- Avoid Penny wise pound foolishness: Many of us exercise so much care in saving one or two dollars. We take so much care and visit the farthest shop to save two dollars. The whole energy is being spent for this without noticing considerable depreciation on the money you had invested in shares. Let go of small things when it comes to money. Then only you will be able to concentrate more on large financial matters and decide them properly. If you go back chasing two or three dollars, you are sure to miss the source of hundreds and thousands of dollars.
- Pictorial persuasion: We all find instant happiness and motivation in small things buying a good handbag (or) a dress. One thing we tend to skip is to find motivation for achieving our long-term goals. If your long-term goal is to spend your retired life in own yacht, get pictures of different yachts. Paste them in areas where you spend most of your time in your house. You can set these as desktop pictures on your laptop and mobiles.
- Unemployed assets: It is something like keeping cash on your hand and using a credit card for paying all expenses. You end up paying interest on credit card unnecessarily. So always be aware of your asset status. Use them prudently instead of taking up a liability.