All companies and businesses want your money. That is what they live on. That is why they create not only products and services: they also create needs that we did not have before. They tempt us and use different techniques of psychology (such as those mentioned in the last two columns), marketing and advertising that touch our deepest feelings and make us feel that we must have, to belong. Or that we don’t want to miss out on a “great opportunity.”
Every day we receive a large number of messages from all sides, especially on social networks. Companies track our activity, they know what sites we browse and what terms we have searched for, many times without our permission (let’s learn to take care of our privacy). They use big data techniques to correlate data that apparently have nothing to do with, to realize what our consumption habits are. That is why advertisements “related to our interests” appear everywhere and messages, which well directed, end up hooking us.
Remember: everyone wants your money, that you spend it on the products and services they offer you. Now, I have always said that managing personal finances correctly is not about not spending, but it is about directing your money to the things that are most important to you, your priorities. That is why it is so important to be clear about them.
I do not think that a person’s priority is to live in debt and yet so many people live that way because they fall into certain money traps that provide them with a short-term satisfaction, but at the same time make them lose focus on what they are doing. It is important.
What are those money traps to avoid?
1. The most obvious is to buy for months without interest things that you should pay in cash. For example, do not put months the super of the week, or dinner in a restaurant, clothes or tickets to a concert.
Doing this involves committing part of your future income to a meal you’ve already digested or a show you’ve already enjoyed. Do you really want to keep paying that for the next year? You will then have less money available for other things and you will feel tighter.
In fact, I think it is important to avoid interest-free months and consumer credit in general, because when we use it, we are spending money that we have not yet earned. In other words, we are living behind and not in front. It’s a lot less stressful first to save and plan, then shop, particularly when it comes to a large expense.
Do I want to change my cell phone next year? I am “paying” it from now on and when the time comes, I pay it in cash. I don’t get stressed. And if some other situation arises or something that is more important, instead of having a commitment that takes away my flexibility, I have money saved that I could redirect towards that, if necessary. I have options and that is something that is priceless.
People do not understand it, because they are very used to living with credit and not having any surplus. Changing the paradigm makes us see a much broader picture, gives us peace of mind and opens up possibilities. I just changed my cell phone after four years, not for lack of resources, but because I preferred to reallocate part of what I had saved to things that were more important. But I kept saving and now that I had the opportunity to do so, I did it without any guilt and without having to commit to debt.
There are many other financial traps very creatively designed to take our money away. Some legitimately and many others fraudulent (in some cases too fine a line between the two). We will continue talking about them in the following installments.
(First of four parts)
Coach in Personal Finance
Heritage
Senior executive in insurance and reinsurance with strategic business vision, high leadership, negotiation and management skills.
He is also a Personal Finance columnist at El Economista, Personal Finance Coach and creator of the page planeatusfinanzas.com
Reference-www.eleconomista.com.mx