Mind your money

Nov 26 2013, 12:55 IST
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Money is certainly capable of playing tricks with the human brain (AP) Money is certainly capable of playing tricks with the human brain (AP)
SummaryMost monetary decisions made by individuals are based on several psychological factors and do not take rational and logical thinking into consideration. Some common traps that must be avoided

always be considered as a warning to spare some time and give a second thought to before purchasing anything.

Items that come for free can often be ones that are priced higher than the rates at which they can actually be acquired for. By considering the need aspect, one will be able to do the simple math and make the correct decision in the end.

Instant gratification

Most of us want to visit a foreign country for vacations. However, living the dream comes at a cost that one must save for. There are some people who cannot control the craving and proceed to seek instant pleasure by purchasing a tour package and not saving anything for the future.

They simply donít want to sacrifice the present-day happiness for something that might or might not come 10-20 years down the line. However, one needs to try and attach instant emotions to their future goals. The aim should be to make the future as secured as possible. Making flexible, long-term money spending goals is an even better idea for avoiding being influenced by irresistible emotions.

Habit of conserving

When it comes to doing the right thing with the unexpected riches gained from oneís ancestors or any other windfall, people tend to have a soft corner for this money and prefer not locking it in any kind of risky propositions. They fear that they will lose their Ďpreciousí money and, as a result, keep them in accounts that have lower chances of growing in due course of time. One needs to utilise such unexpected gains as normal income and invest it in stocks, real estate or any other mode of investment for better gains in the long run.

In the end, it is not about how much one earns. It is all about how one treats the money in due course. Keeping these psychological traps in mind and being wary of them definitely aids in better utilisation of money.

* The writer is CEO of BankBazaar.com

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