Using the correct payment method when becoming financially independent
Becoming financially independent is a difficult task. Learning the value of money, controlling impulse spending, living frugally after evaluating expenses, eliminating any debt and growing net worth are all difficult aims to achieve. One of the ways to do this is by using the correct payment methods when you are purchasing items.
In this day and age of technology, there has been a huge increase in the different types of payment methods that are available. With the growth of e-wallets it has become easier than ever to spend money both online and with the ease of contactless on credit and debit cards it’s also easy to spend in person. However regularly spending without firmly controlling some sort of budget can make it difficult to remain or become financially independent as it easier to access and spend any funds or savings.
Using the correct payment method is important when it comes to being financially independent, as there are various ways to help reduce the amount of spending by budgeting. A good example of this is through using pre-paid cards. Pre-paid cards allow you to budget each month how much you’re able to spend by topping it up with any disposable income that you might have. This may help to stop you from dipping into any savings that you might have, and allows you to easily control exactly how much you can spend. These pre-paid cards aren’t linked to a bank account and are available in multiple currencies. In addition to this, these cards can also be used globally where well-known credit and debit cards are used. This is an easy way to keep track of payments as you can only spend what is on the card without being able to go into credit. Topping the card up as you go can help to stop people from getting into debt through credit cards or falling into an overdraft which can all gain extensive amounts of interest, therefore allowing users to remain financially independent and in complete control of their spending.
Using payment methods such as credit cards however is often a sure-fire way to get quickly into debt, making it harder than ever to become financially independent. Spending less than you earn is one of the toughest financial behaviours to carry out, and when you’re relying on a credit card, it is easy to spend more than you earn, as you only have to pay off a little bit at a time. This however, builds up interest, and although you only have to pay off a small minimum payment each month, this can help to stop you from becoming and remaining financially independent.
Some methods are more suitable for some people and situations than others. Pre-paid cards have been around for a long while and they can either be fixed and disposable or they can allow top ups. Prepaid cards are convenient as they combine the ease of a credit or debit card while still allowing people to easily budget their money, compared to a credit card which can have a large upper limit easily allowing people to get into huge amounts of debt. Pre-paid cards can help to ensure that people can remain financially independent and do not easily fall into debt, by allowing them to budget what they want to spend.
Using the correct payment method when becoming financially independent is important, particularly in your 20’s, as it sets the foundation for your spending in the future. Saving for the future in particular is one of the most important aspects of becoming and maintaining financial independence as you no longer rely on monthly income to survive, giving you true freedom. Taking preventative measures such as using certain payment methods over others are all some of the best steps to help become financially independent and to maintain it.