With a debit card, users are able to pay immediately for any purchases made because the card is tied directly to their bank accounts. This is unlike a credit card which provides users with a ‘’buy now, pay later option.’’ The money in their bank account covers whatever purchases they are making and although it may feel like they are paying with credit, debit card holders need to be in the know and effectively manage their accounts, so that they always spend within their account balance and avoid being overdrawn or being without sufficient funds.
Budgeting is all about optimizing your finances. Spending more than you can afford is fun until you have to pay interests on money that has already been spent. When you create a spending plan, it helps you determine how you spend money on things that you want to do, and prioritize them. This helps you live within your means, plan well and save for the future.
If you are a debit card user, you need to master the art of budgeting because, it helps you pay attention to your money. You become more conscious about spending because you know that any unnecessary purchase made has immediate consequences: the money is deducted from your account straight away. You can therefore make wiser choices and become more aware of where your money really goes.
One of the reasons why you are better off using a debit card as opposed to a credit card, is that you do not have to spend money that you don’t have. Once you can maintain the healthy financial habit of always creating and sticking to a budget, you can easily identify and account for how much you earn and spend. You are able to save better, and prepare for unplanned events and emergencies.
Debit Card Users Need to Track Their Spending
A lot of people do not realize that they have bad spending habits until they make the attempt to actually keep track. A debit card user who spends without a budget has no idea where the income goes. When you budget, you can spend more responsibly and re-focus your financial goals.
You may want to take advantage of alerts and automatic updates from your financial institution, so that you can always track your spending. If you make a purchase, withdraw from your account or carry out any transactions that exceed your account balance, you may have to pay over draft fees (that is if you opted for overdraft protection). You do not have to worry about this if you are able to track your spending and master the art of budgeting.