Give your wallet a health check

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Give your wallet a check-up to learn more about your money habits. Picture Rebecca Michael.

THE contents of a wallet or purse can reveal a lot about a person’s financial health.

From how much cash you carry to the number of debit and credit cards you have tucked away, taking time to work out what are the good and bad contents of your wallet can ultimately determine your economic status.

While the need to carry cash continues to diminish and the reliance on using plastic grows rapidly, we’ve asked the experts what contents you should have in your little piece of leather to help you become a smarter spender and saver.

CASH

But Crown Money Management founder Scott Parry says paying with cash makes you “think twice” before you spend and allows you to be much more conscious of what you should and shouldn’t be blowing cash on.

But Crown Money Management founder Scott Parry says paying with cash makes you “think twice” before you spend and allows you to be much more conscious of what you should and shouldn’t be blowing cash on.

“When you go grocery shopping next leave all your cards at home and take for example $200 cash, then watch the psychology of your shopping shift,” he says.

“Getting people conscious of how much cash they spend by having a certain amount of money for a set period of time makes you differentiate between what you need and want.”

 

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Try using cash rather than a card next time you go grocery shopping to increase awareness of how much you spend.

DEBIT CARDS

This is the compromise between carrying cash and a credit card.

It’s effectively money sitting in your daily transaction account where your income is deposited and you use it to fund your everyday living costs.

It’s your own money and you’ll know when you’re spending it because your internet or mobile banking will keep a live balance for you to see.

Parry says using a debit card will make you consider whether you can actually afford what you are paying for or be left red-faced at the check-out if your card is embarrassingly declined.

CREDIT CARDS

Average credit card debt has climbed to $3200 and the interest rates charged on cards is, on average, a hefty 17 per cent.

Parry describes paying using plastic — in the form of credit — as “financial quicksand.”

“You are just spending money you don’t have,” he says.

“All my clients have $1000 cash as an emergency in their home if something does go wrong and usually you have 24 hours to pay if something does go wrong.”

Keep your credit cards at home or cut them up.

COMPARE CREDIT CARD DEALS

 

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REWARDS CARDS

Many of us have wallets littered with rewards cards that help us rack up points when spending up, but it could be causing us financial damage without even realising it.

Don’t spend just for the sake of nabbing points, you should only use rewards cards when you are purchasing items because you need them and are not making on-the-spot purchases so you can push up your points balance.

 

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Keeping receipts is important in case something goes wrong with a purchase.

RECEIPTS

Whether it’s a big or little purchase keeping receipts is important.

There’s plenty of apps that will help you store them safely and securely online or for the old-fashioned shopper, keep them in a safe place at home in case something goes wrong.

This doesn’t mean keeping wads of receipts but keep the important ones for big-ticket items or purchases you can claim at tax time.

INSURANCE CARDS

Health insurance is important for singles pocketing more than $90,000 per year or couples earning more than $180,000 Browne says otherwise they’ll be stung with the Medicare Levy Surcharge — an additional tax which consumers are hit with it they don’t have hospital cover.

He says have all types of insurance including car, home and life is important because it allows you to have a “plan B.”

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*Comparison rates are calculated on the basis of secured credit of $150,000 over a 25 year term. Please note this comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.