If you’re struggling, or at least not comfortable with the state of your finances it is more often than not because of something you have done. For those times that it is not because of some action on your part, you may have fallen for some well-crafted traps to get your money off you. These traps are orchestrated by businesses, criminals and society alike. They are designed for different purposes but they ultimately result in the same thing; a transfer of money from you to someone else. Let’s discuss these money traps and why you should be avoiding them.

No money down

Not the most common trap in the Zimbabwean set up but you will still bump into it. You are offered an item at no money payable today and all payments deferred to the future, usually in instalments.  What’s wrong with this? Firstly the future commitment of money to paying for the item.  You could find yourself making payments for anything up to 36 months for something that will barely go past 24 months in terms of useful life. Secondly and perhaps more importantly the interest payments can inflate the amount you pay on the item times two or three. This is justifiable if the item purchased is productive and brings in enough money to cover the repayments, otherwise, you may find you were better off saving up for the item.

Free trials

This isn’t very different from no money down. The set-up is the same, they will allow you to enjoy the product for some time but you will often find you need to enter a payment method like a credit card before accessing the free trial. Of course, after your free trial period, they will start to automatically take the money from the payment method and by that time you may have already forgotten about it. They are getting sneakier with ridiculous approaches like 3 and even 1 day free trials.

Buying something because it’s discounted

This one is kind of your fault. Kind of. When it comes to offering discounts the businesses have certainly mastered the art. Sometimes the discounts are so predictable you can plan a timetable around them. There is nothing wrong with a discount at all. I love them. What we need to understand is the distinction between something we want, something we need and something we were planning to buy. Just because you want or need something does not amount to planning to buy it. Planning to buy something is best evidenced by preparation in financial terms. If you buy something because it’s at a discount you haven’t saved anything. Only if you had really allocated money for it then found it cheaper are you saving. Also, most discounts are not really discounts.

Payday loans

While I’m going to speak about payday loans in particular any form of borrowing that is necessitated by a financial deficit is almost always a bad idea. I do understand, it’s very difficult to make ends meet and there are times when there is just too much month at the end of your money. Borrowing will fund the gap but there’s a little problem that I have seen develop when people do this. Firstly that lack of cash should be a signal that you are spending more than you should. What we really should do is take corrective action. Secondly, you are borrowing from tomorrow to eat today, creating a deficit in the future which again must be funded. If you get into the habit of borrowing in this manner you are likely to keep borrowing and each time a little more.

Investment scams

There is no shortage of cautionary tales of investment scams in Zimbabwe alone. While it’s very easy to be critical of people who fall for investment scams the reality is they are designed to play on the emotions of prospects rather than their intellect. They always come at a time you need them, someone you know has proof of making money from them and they come without the hassles you would otherwise associate with methods of making passive income. Plus that huge potential return. Nobody can afford to lose money but if you see a questionable investment opportunity simply ask yourself if you can afford to find out if it’s real or a scam. In most cases, the answer is no.

Surprise contest wins

Your luck has to be more than good to win a competition you didn’t enter, perhaps too good to be true. These kinds of things are associated with the social media age but trust me they have existed long before the internet was a public use service. They are set up like investment scams. You have won $1 million. It’s amazing, right? However, they require $500 to process your winnings. For someone who is about to be a millionaire, $500 isn’t much right? And there is the trap. You need to be really careful with these and understand the design of these scams so you can recognise one when you come across it.

Lack of savings

This one isn’t the fault of a single interest group such as businesses or criminals. It has no beneficiaries. I’d say that it’s a product of society. Let’s face it, saving isn’t sexy. No amount of saving will make you the envy of the land and many people find saving pointless. However, saving is necessary. Saving gives you money to invest. Saving gives you the financial muscle to resist some shocks, Saving teaches you to value your money. Savings save you when things go wrong.

These traps are lurking around every corner and ready to act on us if we let our guard down. A few closing tips to deal with these would be to learn to calculate the full impact of things before going into them. Sure you can afford the monthly instalment but can you afford to pay three times the price for something? With the scams just remember you can’t lose money if you still have it, so when in doubt, don’t. And when it comes to lack of savings, just start with whatever you can save.