Wasting time is our national trait. We postpone things and then we forget doing those things, due to which we end up wasting a lot of money. We live in a world where money is honey. You cannot do anything with your hands empty. One can only meet today’s financial challenges if one knows the art of saving money. This doesn’t imply becoming a miser, this merely means being wise with where and how you spend your money.
Here are the top 5 things Pakistani’s end up wasting money on.
Our desire to page always play host
Pakistani’s waste a lot of money because of hosting lavish dinners every now and then to keep up with society. The other leading cause of wasting money is our national habit of fighting over the bill at a restaurant. Ever heard of going Dutch? Nope doesn’t seem like it. To put things in to perspective, 5 such events where you end up spending Rs. 5,000 on a dinner for friends comes up to 25,000 a year. Instead, if you put this money in a mutual fund every year it would translate to Rs. 430,000 after ten years assuming you received a 10% average return on investment. Sure this isn’t a massive amount, but it’s something, which is always better than nothing. By no means are we encouraging you to skip out on important social obligations which are truly unavoidable – like a dinner for your newly married niece or nephew. All we are saying is plan out your expenses and budget your obligations.
Forgetting to ask for your money from people who owe you
They either forget to ask or shy away due to our social norms. We want to tell you that you don’t have to. We can understand if you postpone asking your friend or family member if they are in tough financial position, but if everything is hunky dory and they continue to go about life as they would usually, then build up the courage and ask them for your money back. That money can definitely be better put to use in a mutual fund, savings account or paying for that long overdue retail therapy session.
Letting your money sit in a low profit rate bank account
You work hard all year for your money. Don’t you think you should make it work hard for you too? Leaving your money in a current account where you earn nothing or in one of the low rate saving accounts is not doing justice to yourself or your hard earned money. Due to putting things off, we generally tend to avoid searching for financial products that offer a somewhat reasonable return on your savings. A current account or savings account are transactional, so let’s use them for that. This means using such accounts for meeting your day to day expenses and not holding your savings or excess cash.
The most suitable products for holding your excess money are mutual funds. Mutual funds are a pool of investments that offer you a variety of returns through various types of financial instruments that they invest in. There are money market funds which invest in government securities issued by the Government of Pakistan. Or alternatively you can opt for other types of funds that invest in the stock market and a variety of other investment avenues – there are a wide variety of Shariah compliant mutual funds. Each mutual fund has its own investment objective, the convenience of investing in a mutual fund is that you get a professional fund manager who invests money on your behalf. These financial products most certainly offer better returns than low yielding bank accounts. The other important benefit of investing in a mutual fund in Pakistan is the tax rebate you qualify for. Lastly investing in a mutual fund also is tax free if you have held your investment over 2 years and above. There will be more about these types of investment avenues in are upcoming articles.
I don’t know why we do this, but we do. A lot of us are late on many fees like our utility bills, loan payments, kid’s school fees and property taxes. All of these bills have significant late fee. If you are someone who does this, we promise you will be left over with a decent wad of cash at the end of the year should you start paying on time. Plan your finances proactively, maintain a note of all your monthly recurring bills, and bills that come up on a quarterly or annual basis. You have enough notice to do so, and there really isn’t any excuse to be late especially in today’s day in age where everything is at a touch of a button.
Not buying motor insurance
Traffic on our streets is quite crazy. This tends to expose us to road accidents. The only thing worse than an unexpected expense is an expense that we could have avoided had we not been penny wise pound foolish. A lot of people tend forget to renew their auto insurance, and just as you do this murphy’s law strikes by sending a motor cyclist straight in your car because they were riding recklessly. Thankfully they aren’t hurt, but your ride has a massive dent which is just an eye sore. You try to recover money from them (don’t know why we do this but we do), but let’s get real we all know what the motor cyclist will say – ‘we can’t afford it’. You get in your car driving off with the massive dent, you send in your car for repairs and bear the expense out of pocket. Just imagine if you had car insurance or motor takaful – you wouldn’t have to bear this unnecessary expense.
Bottom line is stop wasting time, take the right steps and plan your finances wisely. You will start to see the difference in your savings.
For money saving tips, tricks and offers stay tuned to the KarloCompare.com.pk