Common Money Myths To Be Aware Of

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Shopping In The Sales

Against all instincts, shopping in the sales can be one of the biggest money mistakes many of us make quite regularly. That is because we should be thinking not of the price of an item, but of it's value. Take the tale of two sweaters. One is £20 in the sale, reduced from £50. The other is £200. The sale item is cheaper, but it may not be better value. A much better principle for spending is to buy less, but superior quality. If the £200 sweater is pure wool and beautifully well made, it will be something you’ll wear and love for years to come. If the £20 polyester ‘bargain’ gets worn once and then shrinks on the wash, it wasn't that much of a bargain! On a cost per wear basis, the more expensive item would be better value. So when it comes to consumer goods, don't be lured in to buy stuff you didn't intend on purchasing just because of the reduction. The only time a sale is good is when an item you were going to buy anyway is reduced, but in general you should be buying things more strategically than just diving into a sale.

Driving Mistakes

We've all heard that when it comes to cars, you should go for used over new, but this isn't always the best option. A car over five years old, may require more regular servicing and have a higher likelihood of needing repairs - plus, if it's less fuel efficient than the latest engines, you may end up paying our more on petrol if you do a lot of driving. Check out both options as rates of financing are low now - you can even find some 0% car finance deals. If this is the case, you may be better off this way, as the car will still be worth good money when you come to resell it as well. A quality brand will also hold its value better over time - another good reason to skip down to your local BMW Dealers!

No Budget For Fun

If you're trying to save up for something big, like a house deposit, then often you will have made big cuts to your spending in order to save more cash. However, it's not a good idea to try and cut so much that you're left with an unrealistically tight budget. If it means that you can't have any kind of social life - even just the occasional bottle of wine with friends or trip to the cinema, you are unlikely to stick to it long-term. In fact, you may even get into a cycle of ‘purge and splurge’, where you save up strictly for so long, then have a blow out. It's far better to make a realistic savings plan that you can follow while having occasional treats, even if you cut down a bit. That way you're more likely to avoid suddenly getting into debt to fund a night out or a weekend away.

Making Minimum Repayments

The ultimate false economy is only making the minimum repayments on credit card debt. Tempting as it may be to stick that must-have new gadget or holiday onto your credit card and then forget about it, you will end up paying literally thousands more for it. The best plan is to only use your credit card if you know you can pay more than the minimum amount and clear the balance completely within a few months at most. In fact, only making minimum repayments is so damaging, that the Financial Services Authority are currently looking into legislation surrounding it.