November is Financial Literacy Month in Canada. The Financial Consumer Agency of Canada sponsors events and activities throughout the month to promote personal financial literacy. If you are focusing on making good financial decisions to achieve your financial goals, whether it is to reduce your debt or save for a house, we recommend you start by taking a look at what’s in your wallet.
How many credit cards do you carry? How many of these credit cards do you use regularly? In most circumstances you should really only need one major credit card in your wallet. While you may have a second credit card in your name for emergencies (in case your regular card is lost or stolen for example), only keep your primary card in your wallet. Using only one credit card can help you with your money management by helping you:
- Monitor your expenses much easier since most major purchases will be on one monthly statement. Review your statement each month not only to ensure that the purchases were made by you in the first place, but to ask yourself some critical questions about whether or not you are spending your money wisely.
- Simplify your bill payments each month. Having only one credit card bill to monitor will make sure you don’t accidentally miss any payments incurring unnecessary late payment fees and interest. If you are working towards getting out of credit card debt having one statement will keep you focused on paying off that debt quickly.
- If you have a points card, using one credit card for all of your credit purchases will maximize your rewards.
You may also decided to carry a specialized card such as a gas card if you are certain that the rewards program offered on that card is better than your primary card. Again keep these cards to a minimum and NEVER use high interest retail credit cards unless you are 100% certain you can pay the balance off within the statement period. Leave these at home and only use them if the store offers a significant discount for using the card.
If you are an impulse shopper, one of the wises financial decisions you can make is to limit yourself to using cash for non-essential items or “wants”. Keep only enough cash for a short period of time say $25 to $50. The goal is to limit yourself to enough to pay for small extras that you can afford like lunch out with friends or a movie. Don’t carry so much that if you spend it unwisely (or worse lose your wallet) you will have trouble paying the rent or buying groceries at the end of the month.
Used wisely, a debt card is not only convenient but often safer than carrying cash. Use your debt card for essential items like groceries and gas (“needs’). Go online at the end of every week and review your purchases. Like with your credit card statement, this will not only ensure that your debit card has not been a target of fraud, but will keep you focused on ensuring that you are spending money only where you should be.
Rewards Cards, Loyalty Cards
It seems that almost every store offers a rewards program today. Carry rewards cards for stores you visit frequently (grocery, gas, drug store etc) in your wallet. Place the remainder in a separate small portfolio at home. Bring them with you when you will be visiting one of these stores. Think wisely about loyalty cards. Earning points should never be the incentive for purchasing something. Check that the item you are purchasing is competitively priced before you choose to spend in a particular store because they offer rewards.
Keep any gift cards you have received in one place in your wallet. It is also a smart idea to review them every once in a while to see what gift cards you have before you go shopping. Ask yourself if the item you are looking for might be sold at a store where you have a gift card. When you use a gift card at a store, ask the store clerk to write the balance left somewhere on the card to help you keep track of what is left on the card. Have a gift card or balance on a card you are not likely to use? Consider asking around and trading with your friends to take better advantage of those unusual cards.
Keeping your goal in mind can be a good financial motivator. If your goal is to pay off debt, consider keeping a small chart with you tracking your progress towards reducing that debt. If you are saving for a major purchase, keep a picture of the item in your wallet. Take these motivators out and think about them if you are tempted to stray from your objectives.
Organizing your wallet to encourage good financial decisions is the good step towards achieving your financial goals. Use credit and financial tools wisely, and you will be more likely to stay on track.