In honor of Frugal Friday, I thought I would bring you a great money saving tip from my father. When I first told him about my blog and how I’d be writing financial tips for young adults he said, quote:
“You should tell them about your number one money saving strategy – leave your wallet at home and make someone else pay!”
This is where I confess that in my family I am notorious for never bringing my wallet anywhere. In my defense, I am the baby of the family and usually, even if I do bring my wallet, people offer to by me things; but more than once I have been caught in a situation where I had to beg my sister to buy my movie ticket or I got denied sangria at Applebee’s because my ID was in my wallet at home. I still probably owe my best friend from college hundreds of dollars for candy and drinks but thankfully she stopped trying to collect on that a long time ago 🙂 . Even though I swear I don’t leave my purse at home on purpose, it happens often enough that nobody believes me when I say that.
All joking aside, there is an actual useful money-saving tip in all of this. Don’t leave your whole wallet at home but do leave your credit cards! In a recent video clip, Today Show financial editor Jean Chatzky said, “You will spend more with credit than with debit, and more with debit than with cash.”
When you buy something with your credit card, you’re not spending your own money; knowing you don’t have to pay the money back until later, and even then only in incremental pieces, means you are more likely to splurge on something you wouldn’t buy if you had to pay for it all at once. A good rule of thumb with credit cards is: if you wouldn’t go to the bank and ask for a loan to buy the item, don’t put it on your card.
Debit cards are a better choice than credit cards, because they deduct funds immediately from your account. Unlike with credit, debit makes you pay for an item in full, right then and there. However, debit cards allow you access to all of your money, all the time, which can be dangerous if you are an impulsive shopper.
The best way to ensure that you don’t overspend when you’re out for dinner with friends or hitting the mall is to bring cash only. Before you go, decide how much money you can afford to spend during this particular outing. Then, bring only that amount of cash with you. When you run out of cash, cut yourself off – you’re done spending for the day! Knowing you have a concrete limit will make you think twice about spending money on items you don’t really need.
So even though his goal was to make fun of me, my dad really pointed out a great financial lesson. Leave the cards at home and pay cash when you can!