Credit cards

Are Traditional, Low-Tech Ways of Handling Your Finances Better than Modern Ways?

Electronic banking, ATM and credit cards, leasing, online shopping, installment plans and subscriptions, and anything else electronic is the way to handle your personal finances nowadays, but is this better? In some ways yes, but many ways not so much.

Transactions are too easy to make nowadays, which causes us to be more impulsive. It’s not just Amazon that makes it easy to purchase products, but even your local grocery store has online capabilities to place orders at 3:00 AM. The problem with this approach is that you do not feel, either physically or mentally, that you are making purchases, especially when using ATM and credit cards, which in turn, makes you spend more money. Traditional ways required more effort to both purchase items and to pay for them.

In the past, you had to wait until you received your bank statement in the mail to see what your bank balance was. Because of this, you were forced to record each transaction that you made in a paper check register to know what your real balance was. Most likely, you actually reconciled your checkbook to your bank statements on a monthly basis. Ironically, since it is now so easy to check balances and transfer funds, most people tend to pay less attention to the details.

Almost everything can be purchased or rented with small or no down payments and monthly payments. You can finance your iPhone and also that cute little puppy. You  can also cut your cable service to save money, but use 23 different, $9.99/month services and spend more money. It might seem minor, but it really doesn’t make sense.

Please let me know if you still save up to make substantial purchases. Substantial is relative to your situation, but most likely you will take out a loan or use a credit card. Tell your friends and family that you paid cash for your car and they will ask a lot of questions to determine your mental health. Today’s mentality is that if you want something then you should have it immediately. The tactic of delaying purchases is very effective if you want to have strong finances.

I don’t think that we need to go back to the way things were not too long ago, but we should consider combining the best of traditional ways and modern ways. Automatic savings is a perfect example of combining the new with the old. Can you think of others?

If you like what you just read then don’t hesitate to forward/share with your friends and/or click like!

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

Bad Credit Card Policy?

Some business owners are penny wise and pound foolish with their credit and debit card policies. Even worse some do not even accept credit cards. Here is why you should review your credit card policies:

Higher Purchase Amounts: Statistics show that when consumers use a credit or debit card it increases the amount of their purchases. Several studies show an increase of approximately 10% to 15%, but when the purchases tend to be small the increase in purchases can easily climb to 50% or more. Why do you think McDonald’s and other fast food restaurants started to accept credit cards? I believe McDonald’s shows an increase of over 50% for customers that use a credit card. That is why a business should never place a minimum for credit cards either due to this phenomenon. On the flip side, this is why I advocate that consumers use cash!

Convenience Factor: Recently, I went to a really good burger place that I knew doesn’t take cash, and if I didn’t have any cash on me I would have went somewhere else. To make matters worse, the man in front of me placed a fairly large order and was told that he had to walk across the street to get cash from the closest ATM. I wonder how often he will go back there but, the business saved approximately 3% plus $.25 of transaction fees. Next time they will save the transaction fees, but lose the sale.

You Actually Get Paid: Businesses need to get paid to survive, which is why they should accept credit cards. If a customer has an outstanding balance, then it may be easier for them to pay with a credit card.

Businesses may be able to mitigate credit card fees by implementing a few strategies. First, they may be able to charge a surcharge when a client uses a credit card, secondly, they can accept ACH’s, which have lower transaction fees, and lastly, they can shop around for lower-cost processors, such as Square.