Let us face it, if you are new at the game of saving, there are a few pitfalls you may fall into without even realizing it. You may have read this or heard that from your most financially savvy friends and followed suit in trying to save that hard earned money, let us bust 3 saving myths.
To budget or not to budget?
An old wife’s tale says you should always know exactly how much it is you are going to spend and where each penny forked is going.
Even I used to believe that this would somehow help me save large amounts but after reading a report from Emory University (In the US), my thoughts took a 360 degree turn and instantly went against the ‘keep a budget rule’.
Studies indicated that if you have a budget you would automatically spend more than the average person. An example you say?
You are in desperate need of a PC and your budget is HKD1000, it has been proven that instead of looking for anything significantly lower than your budgeted amount, you will subconsciously select an upper case and will not even look for something cheaper, so you will end up paying between HKD800 and HKD1000.
On the other hand, if you have got no budget, you will consider features and see if you can get the best value for money at the lowest prices.
Don’t get us wrong, aggregate budgets are a great way to save money but if you are planning on buying a single item that might burn a deep hole in your pockets, tell yourself that you need a ‘MacBook Pro’ so that you know exactly what it is you are looking for.
Maybe money can buy you happiness
Well this only suffices for low and middle income earners as more research depicts that with a salary increase of 20 percent the above mentioned are instantly happier. Although this is a rather controversial and biased analogy, the results were pretty accurate.
Generally speaking, the overall emotional being of the subject’s increases with until it reaches a point where it makes no difference anymore. That is, until emotions reach a constant – the typical economic law.
So ladies and gentlemen, money (along with other factors) does buy happiness. Save well, plan well and you will open a chest of pure happiness.
Are you really financially prepared?
Hong Kong is one of the few countries where employees are prepared to save and work hard to make sure that they are financially stable. In other countries, especially the United States of America, only 1 in 5 adults can tell you how much they spend on rent, food, and basic monthly necessities. These are the people who heavily rely on their monthly debit card top ups.
So don’t ever assume that just because you are financially savvy, the whole world is; most people do no even have a financial plan and instead of looking forward, the always turn back with a huge grin saying ‘look at what I did’, forgetting that when it rains, it pours.
Eliminate this mentality by having values and knowing exactly what it is you are saving for.
We hope these 3 saving myths have been insightful – don’t be shy to tell us what more you want to know and we will be sure to answer!