It’s not easy when you’re caught up in a mess of debt, high-interest rates, and bad credit rating. Having to worry about your budget and making sure you don’t overspend can be stressful. And trying to work your way out of credit card debt is a test of patience. There are many ways to control your spending and improve your finances. Using a debit card is one of the most overlooked and easiest solutions to manage financial issues. While most people see their checking account as their primary source for daily spending, a debit card will do as much and even more. Using a debit card will help you build good money saving habits by limiting you to what you can spend.
Also known as a pay-as-you-go card, debit cards are better than credit cards because you are only spending money you actually have. These cards are either Visa or Mastercard so you can also use it wherever these cards are accepted.
There are various reasons why you might want to consider a debit card to help manage your finances and worry less about credit card debt.
Monitor Spending Habits
Keeping track of spending is one of the easiest and fastest ways to develop good financial discipline. Mobile or online banking conveniently allows you to monitor transaction history and regularly check your available balance. There are also financial apps that allow you to build good money spending habits using a debit card. Some apps have spending analytics that help you categorize each transaction – whether it’s your expenses or income.
Avoid Overspending and Improve Budget
The good thing about debit cards is that you can only spend the money you have, not the credit the bank allows you to have. Basically, this will limit you from making unnecessary purchases and going over budget.
However, if you are not careful, you still might overspend. To avoid this, consider setting up text or email alerts for every purchase made. This will develop the habit of checking your card like cash in hand. You may also be tempted to spend less if you have a constant reminder of what’s going on in your account.
Consumers who have credit cards are known to overspend. Impulse buying is common when using a credit card. The fact that there is no need to pay for that extra item you don’t actually need upfront is a convenient temptation. With debit cards, you can actually control your spending and minimize impulse buys. To develop good money saving habits using a debit card, create debit rules. A 48-hour rule gives you two days to think about a purchase before spending your money on it. Schedule a “no-spend” day on your calendar or leave your debit card at home when you know there is no need for it. Spending temptations isn’t only for point-of-sale transactions. Online shopping is also one of the deadliest marketplaces for overspending. The 48-hour rule and “no-spend” day can also be applied to online shopping. Make sure to give those items in your cart some extra thought before clicking that “pay now” button.
Link Debit and Checking Account
One other way to develop good money habits is to let your checking and savings/debit accounts work together. Schedule transfers to your savings account if you have extra in the budget. An automatic transfer from your checking to your savings account will lessen the temptation to spend money. This is a great way if you are saving up for a grand holiday or even for your emergency fund.
This habit can be problematic too, especially if you are in the habit of transferring funds from your checking to your debit account to cover out-of-budget or unnecessary purchases. Make sure that your savings account will serve only one purpose – for savings.
Spend Less with Debit Cards
If you know how to use your debit card wisely, it can be a powerful and useful tool in building your finances. Owning one will help get your spending habits under control. Keep in mind that having the right understanding and mindset on spending with a debit card is important in keeping your spending habits in check.
For more ways and information on how to achieve your financial goals, visit Calcite Credit Union.