Financial adviser Salve Duplito said these financial loopholes originate from people’s “soft spots” like desserts, perfumes, or gadgets.
If left unchecked, these soft spots can turn into “money-sucking loopholes,” she said.
Here are five hidden loopholes in finances:
1) Bank charges and interest charges on credit cards and loans
Duplito said charges such as the P7.50 fee charged by banks for other bank withdrawal can amount to a large figure if overlooked.
“Don’t be fooled by the seemingly small amounts like the P7.50 ATM fee for withdrawing from another bank’s ATM,” Duplito said.
At only six transactions per week, the P7.50 ATM fee costs P45 per week, P180 per month, and P2,160 per year.
Interest charges and late payment charges on credit cards can also cause a huge dent on finances if left unchecked.
“When you pay your bill in full every due date, you don’t pay any interest charge at all. It’s like having free cash on some days of the month. But one you miss your due date or don’t pay in full, you become a borrower. That means interest charges start piling up the moment you swipe your card again,” said Duplito.
2) Installment costs of tuition, large appliances and other similar fees
In most schools, the cost of opting for monthly or quarterly tuition payments can range from P3,000 to P8,000 every year.
To reduce installment expenses, Duplito suggests saving up for tuition fee a year before you need to pay it.
She said that assuming tuition costs P100,000, the first step is to open an account in your bank and name it tuition; and then instruct your bank to automatically transfer P8,500 a month every time you receive your salary.
“You don’t think about, you don’t worry about it. The only thing you have to do is make sure you spend only what remains in your main account. By the time you need to pay your tuition, the money is right there,” said Duplito.
She said the same strategy can be applied to appliances, noting that if you are paying additional installment cost to have that item now, that’s not financially smart.
“Save first, then buy,” she added.
3) Cost of gourmet food
Duplito said expenses may take a hit if you have developed a habit of eating gourmet food.
She said that if your budget doesn’t have space for gourmet food, simple food will do.
“The cost of simple home cooking and a meal in new restaurants everyone is raving about is as far from each other as the opposite sides of EDSA on a Monday. But they all fill the stomach the same way, no matter what your Facebook friend’s post says,” she said.
4) Recurring tech expenses
Duplito warned that expenses used for technology may give birth to more expenses like apps, games, and SMS charges.
“Gadgets are pricey and in many cases, they are more expensive than buying the minimum allowable number of shares of a good company,” she said.
Duplito advises to constantly review your tech expenses and adjust when you feel like you are overspending.
5) Missed tax deadlines
Duplito said that if you look at your books in the last five years, the biggest expense is probable tax.
“That means if you miss your deadlines, your late payment fees and surcharges will be huge as well,” she said.
“Hunt those little loopholes without mercy. That’s a habit that can save you a lot of money,” said Duplito.
source: www.abs-cbnnews.com
