Finance is one of the most difficult fields for the average person to master, especially when it comes to their own finances. This is because often we are not good judges of our own situation, as obvious bias can exist. The majority of people are in a state of financial ruin, which seems ridiculous because the world is populated by generally smart people. Well the problem is that there are equally intelligent people who are trying to take your money while you are trying to save it. This happens all of the time in the form of marketing, advertising, and special promotions, all designed by an elite team to part you with your hard-earned cash. It is these kinds of spending traps that encourage you to spend money with the illusion of saving it.
One great example of a classing spending trap is the rewards incentive that is offered by most credit card companies. Remember that these companies have one goal, to make as much money as possible, something that they can’t achieve by giving it away. The same thing applies to you and your finances. While rewards for spending sounds like a good idea, because you are getting money to spend money, you are always spending far more money than you are saving. Reward cards also usually carry hidden costs like a higher interest rate. So while it may seem like you are saving money, in reality you are actually losing money in a cleverly devised spending trap.
John Labunski is a finance expert who notes that you need to be wary about spending traps and marketing schemes.