5 Common Things People Waste Their Money On
With innovated technology and beautiful, glamorous clothes, many of us fall hook, line, and sinker! Everything seems cool until you find yourself looking for loose change inside your sofa. Have You Fallen for any money traps?
You might not even realize some of these things, but these are some of the common traps that many people fall into without knowing!
These are the 5 money traps you need to know in order to save yourself some dough.
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1. Student Loans
Throughout your time in school, you were brainwashed to think that post-secondary was your source to success. Without further education, you’ll be stuck working part-time at your local fast-food restaurant flipping burgers.
So, what do you do?
You go into debt for the potential chance to make a decent living in the future.
Many people don’t land a job related to their field for years, and they end up being discouraged and waste their degree or go back to school to become more qualified.
The fix: Don’t go to college/university for a field that you’re not interested in and don’t be pressured into doing something that you don’t want to do. There are other means of success and it doesn’t have to be just school. If you want to go to school to pursue your “passion” then be sure to pay off your student loans as soon as possible to minimize interest.
2. Buying A Car That’s Too Expensive For You
Many people are not buying a car in their price range. In their mind, if they can pay for it, they can afford it. A car should not be one of your biggest expense.
The low bi-weekly numbers are enough to tempt anyone, but most people don’t actually consider the fact that they will be paying for this car for a number of years. On top of that, insurance, gas, and maintenance takes a hefty amount out of your paycheque, and don’t forget that pesky interest!
The fix: Make sure your monthly car payments do not exceed 10% of your monthly income. You can read more about the 20/4/10 car rule here!
3. Paying too much interest on credit cards
Credit Card debt is one of the biggest and easiest debts that many people fall into. With the enormous interest rates, it’s no wonder that it’s so easy to fall victim to this money trap. “With great power, comes great responsibility”.
If you got good habits of paying in full and paying on time then this trap doesn’t apply to you, but many people do fall victim to these deadly cards and it’s crazy rates.
4. Not Saving Enough and Spending On Stupid Things
One of the most popular money traps is when you’re not saving enough and spending too much on useless things. Instead of trying to Keep Up With The Joneses save a portion of your income and set aside small amounts for things that actually matter.
- Save up an emergency fund
- Pay off any debts you may have
- Invest in the stock market
- Save up to make a down-payment for a mortgage
- Contribute to your RRSP in order to lower your taxable income
- Use this money for your side-hustle (advertising fee, hosting fee, camera equipment, etc.)
The fix: Only spend on your “wants” after you devote some of your income to saving, investing, or paying debt. Some people have it completely backward where they save after they spend. In my Dave Ramsey 7 Baby Steps blog post, I talk about where you should be on your financial journey if you want to be financially well-off.
5. Not Learning About Money
A big part of this is being trapped in a fixed mindset on doing the things the way you were taught. Let’s face it, schools don’t teach you much when it comes to money.
The fix: Don’t be afraid to take initiative and learn how you can take steps into making your money grow. There are better places to keep your money and unless you are going to learn about money, you will be stuck in a rat-race.
If you want to start earning more money then you can check out my blog posts here:
- How To Earn More Interest with 0 Risk
- Learn How to Invest In The Stock Market
- Invest with as little as $100
These were the 5 money traps:
- Not Saving and Overspending
- Not Learning How to Invest
- Paying Too Much for Your Car
- Racking Up Student Loans
- Falling Victim to Credit Card Interest
Let me know what you think of this blog post and have you fallen victim to any of these? Or are there other money traps that you think I missed?