Greetings and welcome to the third edition of Wallet Wellness in 2024 - your midweek source of practical financial tips to elevate your money management skills!

Today, we are looking at 10 of the most common money wasters that you should avoid this year to keep your wallet fuller and healthier. 

We hope last week’s deep dive into the four main factors that affect your ability to make money was eye-opening and you are already strategizing on how to build each one up.

As always, be sure to check out the Concept Corner below for a deep dive into the money concept of the week.

Let’s dive in!

MONEY254 TIP OF THE WEEK

10 Big Ways People Waste Money

Every time you open your wallet to spend, you are either getting value for your money which you should be proud of, or losing your money - which you should try to avoid as much as possible. 

Last week, we discussed how getting your skillset, network, mindset and health right is necessary to progressively increase your income. And it is not a walk in the park. That is why protecting what you are already earning today is essential. 

While some instances of spending may be in the grey area, today we are discussing those that clearly fall under the category of money wasters. 

1. Emotional Spending

Allowing emotions to steer your spending can wreak havoc on your budget. Impulse buys and retail therapy might provide temporary relief, but they chip away at your long-term financial goals.

• Identify triggers: Recognize emotional cues leading to spending. Read More

• Create a cooling-off period: Delay purchases to assess necessity. Read More.

• Channel emotions: Find alternative, non-spending outlets for emotional well-being. Read More.

2. Paying for Convenience

While convenience is tempting, it often comes at a steep price. Whenever you are trying to find an easy way out, whether it is ordering food online on a lazy afternoon instead of cooking or taking that last-minute taxi instead of the bus, it costs you money you likely didn’t intend on spending. Frequently going for pricey conveniences can silently drain your finances.

• Evaluate necessity: Determine if the convenience is truly essential. Read More.

• Seek alternatives: Look for cost-effective alternatives without sacrificing too much time.

• Batch tasks: Optimise your time by bundling similar activities. Read More.

3. Keeping up With the Joneses

Comparing lifestyles and succumbing to the fear of missing out (FoMo) can lead to unnecessary expenses and financial strain.

• Set personal benchmarks: Define success on your terms.

• Practice gratitude: Focus on what you have, not what others flaunt.

• Budget for experiences: Prioritise spending on experiences over possessions. Read More.

4. Falling for “Planned Obsolescence”

Constantly chasing the latest gadgets can turn into a costly habit. The ‘planned obsolescence’ theory argues that many manufacturers design products with a limited lifespan to encourage frequent upgrades.

It potentially creates a gadget “upgrade addiction” whenever a ‘better version’ is produced, or when the otherwise still functional gadgets simply become unfashionable.

• Assess necessity: Upgrade only when current devices hinder productivity.

• Consider refurbished options: Explore cost-effective alternatives.

• Maximise current assets: Optimise the usage and lifespan of your current gadgets. Read More.

5. Lifestyle Inflation

As your income rises, so do expenses - if unchecked. This is called lifestyle inflation. Escalating lifestyle demands whenever your income increases can erode your potential for savings and investments.

• Set budget milestones: Put a cap on how much your spending can increase with income growth. Being able to comfortably live below your means is ideal. 

• Prioritise savings: Allocate a percentage of each increase in income to savings or investments.

• Regularly reassess spending: Periodically review and adjust your budget based on changing circumstances. Read More.

7. Waiting Until the Last Minute

Procrastination can lead to rushed decisions, emergency spending, and missed opportunities for making a saving such as discounts or avoiding a late fee.

• Plan ahead: Anticipate future needs and expenses.

• Set reminders: Avoid last-minute panic with timely reminders.

• Break tasks into smaller steps: Overcome procrastination by tackling tasks in manageable parts. Read More. 

8. Falling for Financial Blackmail

Being influenced by friends or relatives to spend money on them can strain your finances and relationships.

• Establish boundaries: Clearly define limits on financial assistance.

• Communicate openly: Discuss expectations and financial boundaries. Read More.

• Prioritise your financial health: Ensure your own stability before assisting others. Read More.

9. Spending Your Money to Please People

Aligning your spending with the expectations of others can be detrimental. It's essential to prioritise your financial well-being over external validation.

• Define priorities: Identify personal financial goals irrespective of societal expectations.

• Communicate boundaries: Politely decline activities or expenses beyond your means.

• Offer alternatives: Suggest budget-friendly alternatives for socialising. Read More.

10. Spending All Your Money on Living Expenses

Neglecting to save for the future while focusing solely on immediate needs can leave you unprepared for emergencies or retirement.

• Establish an emergency fund: Save three to six months' worth of living expenses.

• Invest in the future: Allocate a portion of income to retirement accounts or investments.

• Track and cut unnecessary expenses: Regularly review and eliminate non-essential costs. Read More. 

CONCEPT CORNER

Cost Per Use Formula

It is very easy to buy things that we think we need only to soon find out that they are not that useful in our lives. The cost per use formula becomes invaluable in such circumstances since it offers a pragmatic way to evaluate the long-term value of purchases. It enables us to make informed decisions, prioritizing quality over quantity. Read More.

MONEY PSYCHOLOGY

The 7 Money Personality Types

How we spend our money could be intricately linked to our money personality types. Your money personality determines how you make financial decisions and your relationship in money. By knowing the strengths, pitfalls and opportunities in your money personality type, you can better make decisions about your money goals. Read More.

MONEY254 #MONEYTOK

Free Yourself From Short-term Loans

While short-term loans such as digital loans can be life savers especially during emergencies, overdependence on them can be detrimental for your overall financial health. In today’s MoneyTok, we explore four things you can do to make sure you are not relying on short-term loans. You can also read about it in detail here. 

@money254hq

Medical situations, delayed paychecks, and The needs might all cause you to take out short-term loans. Is getting into debt, however, the ... See more

That's it for the third Wallet Wellness edition of 2024! We hope these financial tips have added some energy to your mid-week hustle. Stay tuned for more practical insights in our next edition of "Wallet Wellness" next week and watch out for Money Weekly on your inbox this Friday.

Also, don’t forget to download the Money254 App on the Google Play Store, and remember that we can help you compare over 300 loans, savings accounts, current accounts, and more if you’re thinking about your next product.

Cheers to your wallet's well-being!

Eric and the Money254 editorial team.