Smart moves to make the most of your money
Our relationship with money is complex, and we do not realise it unless we encounter financial setbacks despite bracing ourselves for them. Saving and investing are not enough to be on top of your expenses. You need to understand how money is controlling your day-to-day expenses.
Financial problems are ubiquitous. You may have experienced them before, too, but you should be able to get out of them using the right strategy. You are probably making the most of your money if you do not end up taking out very bad credit loans from direct lenders in the UK for essential expenses.
It is hard to stretch your dollar, especially if you are on low wages, but with due diligence on spending, you can make it happen and avoid borrowing money from lenders to meet essential expenses.
Smart and effective financial moves to make the most of your money
It is not a cinch to get by with the money you have. It is essential to set aside money and avoid shopping pitfalls. Here are some of the effective strategies to make the most of your money:
- Try paying by cash
The use of a credit card is not a bad idea if you make smaller purchases with a promise that you will not max out the limit and pay off the balance on time. It may help build your credit score, but people actually tend to spend more and buy unhealthier things. The convenience of a credit card can lead you to buy stuff you do not even need. It is a fact you do not realise unless you are broke.
Try paying cash for your frequent smaller purchases, such as buying coffee and meals. When you see cash going out of your pocket, you will more likely feel like putting a lid on your spending. The problem with a credit card is that it harbours the delusion that you still have money, which is already exhausted, in your pocket to spend.
You can avoid spending on several things like coffee and meals. Bring a packed lunch. Cut down on coffee intake.
- Your personality
Your personality can play a role in deciding whether you are a prodigal or frugal. Many people think that their spending behaviour boils down to genes and upbringing, but if this preconceived idea were true, no twins would have very different mindsets towards spending. Gregarious people are more open and comfortable spending money, while those who strictly believe in prudence are good savers.
Of course, you cannot change your personality, but you can fine-tune your habits to your budget. Nothing can justify extra spending, not your personality trait. You should whittle down your expenses if you do not want to end up with loans at home online.
- Fall for the “compromise trap”
Online stores and shops often display things in groups, and they all vary in price. If you are about to buy a printer, you will find that there will be other models with the same specifications but at different prices. The prices will range from the most expensive to the cheapest one.
Your psychology will prompt you to buy an item that is neither too expensive nor too cheap. This practice is called a “compromise purchase”. People fall for this trap because they think a cheap item may not be good enough. Two in three people are more sensitive to the disadvantages they think they will experience if they prefer a cheaper alternative.
- Do not fall into the price trap
Something is available at £99, so you think that it is discounted. Most of the products are displayed with a price tag ending in 9. It affects the psychology of the user. They think that the product is way cheaper or heavily discounted.
If you round it to the next digit, you will be paying £100. There is only a difference of £1, but superficially, you think you are paying a two-digit price rather than a three-digit price, which is heavily discounted.
- Off-season purchases will save you money
Umbrellas and raincoats pick up demand during the rainy season. Likewise, the demand for snow shovels increases in the snowfall season. Tourism becomes more expensive during the summer break. When there is a high demand for a particular product, prices go up.
Sometimes, there are economic factors responsible for balancing out the demand and supply, while other times, suppliers indulge themselves in unethical practices to make profits. There are certain things that you can buy in the off-season, such as a snow shovel, boiler, and raincoats – to name a few.
- Compare prices
You become tempted to buy an item as soon as you see a discount or a scheme like “Buy 2 get 1 free”. Do not fall prey to the price listed on the packaging. You should actually calculate the cost of an individual item to see if you are actually saving money.
You should also compare the prices of that item with those of other stores. You are more likely to get it at lower prices from somewhere else. It makes more sense to buy it from another store where it helps save you money.
In fact, this practice should be followed while borrowing money as well. Lots of lenders are out there providing the same kind of loans, but they charge different interest rates and fees. You should carefully examine which lender is cheaper. It makes more sense to borrow money from those offering affordable interest rates. Compare fees as well because they are added to the debt cost, snowballing into a larger debt.
The repayment length is another factor that helps you save money. You will end up paying a lot of interest in total if the repayment length is long. By choosing a smaller repayment, you can save a lot of your money. However, the monthly instalment will be bigger.
Additional tricks to make your ends meet
Here are the additional tricks you can follow to make the most of your money:
- You should create a budget to ensure that you do not overspend.
- Use schemes and coupons to buy groceries. Compare store prices with online prices.
- Items near the expiration date are cheaper or put on sale. You can buy them if you can consume them within that timeframe. Some items stay fine after that date.
- There is help with food costs if you cannot manage with your current budget.
- Cancel your direct debit for unwanted subscription plans. There is no point in signing up for magazines, for example.
- Switch energy suppliers if you think you can get a cheaper plan.
- Save money on clothes. Buy from high-street markets rather than fashion stores.
The bottom line
In a nutshell, nobody can be perfect in money management. Some people can be average at budgeting, while others may be above average. A number of factors decide that, so there is no need to be hard on yourself. If something brings a smile to you, it is never a bad idea to treat yourself occasionally.