Be Aware Of These 7 Biggest Psychological Money Traps
Bangalore: Money plays a lot of trick with the human mind. A lot of financial decisions made by us are dependent on psychological factors. It is extremely crucial to identify money traps that are usually based on emotions, reports Teri Cettina of Bankrate.com.
Read on to know 7 common money traps that people often fall prey to because of psychological influence-
1. Be careful of the word ‘free’
The word ‘free’ is irresistible and most of the time it’s actually irrational. It is a way of alluring buyers to spend money on something that they wouldn’t have bought otherwise. Dan Ariely, Professor of Behavioral Economics at MIT and author of "Predictably Irrational: The Hidden Forces That Shape Our Decisions" speaks from his own experience of having bought an Audi when he actually needed a minivan. The offer of free oil changes for next 3 years on Audi influenced his decision.
The Solution
"Whenever you see the term 'free,' consider it a warning to slow down and consider your choice very carefully," advices Ariely. Always assess your need before buying the thing that is associated with the term ‘free’. Most of the time a simple calculation will tell you that there is always a cost linked to that item and it might be more than you intend to spend.
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