4 Major Money Traps to Avoid
They're out there just waiting...here's how to sidestep them.
The Trap: Starting a Radical Spending Diet
As any dieter who's cut carbs, alcohol and red meat out of her diet knows, it'll go really well...for two weeks. Then one night you'll end up sitting at the table wondering how you managed to consume five muffins, two burgers and four glasses of wine over an 11-hour span. The same is true with money. You can't cut back in every area of your life at the same time; it's just too hard. At some point, you'll find yourself on the other side of a shopping binge.
Try Sethi's two-pronged saving strategy. Here's how it works: Looking at your bank and credit card statements, categorize everything you've spent money on in the last month. Then, pick your two biggest discretionary expenses, for example, eating out and buying beauty products. Make a promise to yourself to reduce just those two by 25 to 30 percent over the next few months. Eventually, your new budget will feel normal, and you can move on to cutting another set of expenses without getting overwhelmed.
Next: 6 money lies we tell ourselves
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.