Make a habit of carrying a small amount of cash with you. It seems that with the introduction of the ATM card, and the advertising teams that banks hired to market the idea that using an ATM card is the “same as using cash”, most of American has succumb to this idea. It is NOT the same. There are usually convenience fees involved to withdraw your money, fees from vendors, fees for processing the exchange,and possible overdraft fees… it is certainly not the same as cash. Carrying a bit of cash will minimize the need for all of these fees. Have you ever noticed that those machines usually only dispense $20 bills? What if you only wanted $10 to have on hand if you or your children needed something small, like a drink or some kind of treat? If you don’t have cash, you would stop at the ATM machine, giving you twice as much money and likely charging you a convenience fee to get it. Now, are you more likely to spend more money since you have a $20 on you instead of a $10? A rule of thumb that may be useful is to always have two $5.00 bills in your pocket or wallet at all times. Stop at the bank and take out $50.00, asks for it all in $5.00 bills and I keep it in an envelope at home. You will never feel broke or deprived when you have cash to spend, but limiting the amount and the convenience fees involved with getting to it is the key factor that will saving you money.
Always understand the rules of your bank account. For example, many banks charges a fee of $15.00 or more per month if your account drops below $100.00. Don’t give your money away! You earned it and deserve to spend every penny of it.
There are some people who can use credit cards without having any issues. Credit cards are very different than bank ATM cards. AFTER you get a good grip on your budget and have established a good emergency fund and good money habits, then you may want to look into the perks offered by credit card companies. The biggest problem with credit cards is when people use them to compensate for their terrible budgeting skills. If you cannot pay your credit card balance off in full at the end of each month, then you should not use credit cards. (The only time this is not true is if you make a large purchase on a card that has a “NO INTEREST for x-number of months” offer…. And you pay equal amounts of the total bill each month so that it is paid the month before that NO INTEREST deal expires… there are no other exceptions!)
If you already find that you have credit card debt that you are not able to pay off (in full) when the bill is due, you are already in an emergency state! It is OK, because you are going to fix it, but it must be your absolute priority to get rid of that credit card debt. Nothing gets on my nerves worse than when people get taken advantage of when they are vulnerable, and being nickle and dimed by credit card fees is a prime example of this. If you are paying interest to credit card companies, you are losing your hard-earned money into a black hole and you are getting absolutely nothing for it.
Keep going with Habits to Learn – Part 2!