5. Money is money no matter what the source is

The practice of saving money in separate envelopes for separate needs or goals is most of the time a practical approach to saving. The same practice can however get you into trouble sometimes if you stick too much to rules. For example- even though you have enough liquid cash at home, you are maintaining a credit card balance and not paying it off with the available cash.

The Solution

Always remember that money is money no matter what the source is. Maintaining a home loan or other loan with high interest even though you have sufficient cash at home does not make sense. Also, if you get a tax refund, do not consider it as ‘free’ money and buy unnecessary things with that money only because it’s not part of your salary.

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