File picture: Pexels
File picture: Pexels

Money traps we are all guilty of falling into - and how to avoid them

By Farah Khalfe Time of article published May 30, 2021

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In today’s fast-paced, consumption-focused world, hidden fees lurk everywhere. From cellphone contracts to car finance, you are probably paying fees that could be avoided

By spending a little extra time identifying these unnecessary charges, you can redirect that money towards something worthwhile, such as a retirement fund or other long-term savings goals.

TELECOMMS

It is difficult to go a day without sending a message from your smartphone, browsing the internet or posting to social media. Unfortunately, the costs of these seemingly everyday activities can add up, especially if each service is with a different provider.

What to do: Be aware of what you use and when. Then, shop around for the best provider and package for your needs. That uncapped anytime mobile data contract might sound attractive, but if you’re using your office or home Wifi most of the time, you probably only need a fraction of what it offers for those days when you’re out and about.

If you’re often on calls, opt for a bundled data and voice call package at the same price or less. Third-party subscriptions such as “free ringtones” or horoscope services, could be the reason you find yourself always having to buy airtime or data. Contact your service provider and ask them how to opt-out.

For smartphone users, apps running in the background could also berating your data. Go to your device’s settings and check which apps are using data then turn off background data for apps that don’t require this. The money you save on these repeat services could be working hard for you in a long-term savings account.

CAR FINANCE

Succumbing to peer pressure and buying a fancy car could mean you’re paying thousands every month on a depreciating asset. When choosing a car, consider the additional costs of owning a vehicle: Insurance, fuel, tyres, and servicing, to name a few. A car with a monthly premium of R10,000 can end up costing R15,000 per month all-in.

What to do: Ask the salesperson about balloon payments, extended warranties, insurance costs and delivery charges. Add-ons can cost a lot, but some can also be big money savers in the long run. Ask questions, read the fine print and choose carefully. You can also consider buying a demo model or a secondhand car. It’s well-known that a new car loses value as you drive it off the showroom floor and, according to the Automobile Association (AA), a new car will have lost around 40% of its value by the end of the first year. Why not let someone else take that loss and buy a car that’s a year or two old? You can then take the money you save and put it towards your retirement fund instead.

Read the full article and more exciting content on Fast Company SA.

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