Sticking to the budget is essential to avoid a shortage of money. A monthly budget helps you to save money for further investment. The various payment types avail for you with different benefits. But flip the coin and see the other side too.
Traditional payment or digital payment can be handy depends on how much you’re spending. Limitless spending or overdrawing can cause you trouble. At the end of the month, you don’t want to be empty-handed. Using cards to pay can be tricky. But in today’s world, everyone is like, “go cashless.”
A safe and secured transaction is now a great concern. Here you will learn different payment types to help you stick to the budget.
Payment Types Helping You To Stick To Budget
People often ask what payment types are suitable to stick to the budget. Well, there are a few best methods to stick to your monthly budget without overspending.
Payment Using Cash
Cash-based payment is safe and secure. You can pay with only how much you have. Even in 2020, a lot of people prefer this method. It’s easy to keep track. The reasons are
- Lack of bank account
- Don’t know the online payment method
- Don’t have any debit or credit card.
- Mistrust of the system
- Sometimes banking fees and deposit requirements are costly.
- For, migrant workers without having a stable home address can’t open a bank account.
The envelope method-old school way: This method is handy while paying by cash. You probably have seen your senior elders keep a fixed amount in the envelopes for various purposes: rent, school fees, grocery expenses, monthly medicine bills, etc. Yet this is an old method to pay by cash. Overall it definitely maintains the budget, hence saves money.
Payment Using Debit Card
If you don’t want to carry a lot of cash with you, go for the debit card. People with bank account get a debit card. You can access it anywhere to purchase or pay the bills. If you can’t, use the card in an ATM to draw out cash to spend.
Here, you pay directly from your checking or savings bank. There is no debt or extra fees to pay. You can only spend how much you’ve in your account using the debit card.
However, the debit card is not so safe using it in e-commerce. Sometimes, hackers can access the information and draw all your money from the account. As a result, you’ll be out of money to pay any bills. Also, as the debit card is linked to your account, be careful of overdraft fees. You will be charged $35 as an overdraft fee for each transaction overdrawing your available bank balance.
Payment Using Credit Card
You surely think that how a credit card can save your budget. But yes, it can. You have to be careful while using it without overspending. A credit card enables you to loan money temporarily from the bank. You need to pay back at the end of the month or billing cycle. The credit card makes paying bills easy.
There are mainly two utilities of using a credit card than a debit card.
- Credit card protection: It gives you great fraud protection. The fraud detection system has become important to every bank and financial organization to reduce the loss.
- Credit card statement: Credit card statement provides you the entire list of your spending. You can keep track of what and where you spend your money on. You have the self-control to pay bills.
Apart from these, credit card provides you extra benefits too like
- You can review your transaction daily.
- You can spend a regular spending limit to stay in control.
- Schedule your payment to pay off the bills to avoid the late fee.
- You can earn rewards in several dollars as a cashback depends on your payment.
- There will be more cash flow in your account.
At the same time, the biggest disadvantage is sometimes you do overspending. You may go beyond what you have in your account. If you can’t pay it back in a given time, you’ll face credit card debt. Consequently, it costs you late fees and a high-interest fee. Missing payment can freeze your credit card. The collector of debt can sue you in the civil court.
Payment using Online Apps
The alternate payment method is using online apps. Online digital payments have rapid growth and various options for payment. It helps to maintain your cash flow. With just one click, you can quickly pay off your bills or credit card debt without using any card or writing cheques.
- Automatic Clearing House (ACH) Payment: ACH payment is a US financial network used
for electronic payment or transfer money. This is referred to as direct payment. One can transfer money from one bank account to another without any paper checking/ using debit or credit card/ cash.
You can pay any corporation or financial institution or other customers directly from your savings/checking account to pay credit cards or other bills. ACH will move your money to the receiver’s bank account. The transaction is either free or about $3. Through ACH payment, you can stick to your budget as it is a hassle-free method. You can also set automatic payment monthly to be paid timely. Keep in mind while you’re setting it monthly. If you pay more than you’ve in the account, you’ll receive an overdraft fee.
PayPal, Venmo and Zelle- Online Payment Apps: Peer-to-peer or P2P payment methods have rapid success in online payment. You only have to link your bank account with a P2P payment system and can transfer money anytime.
PayPal is the highest used online payment app. You can send or receive money worldwide using a PayPal account using your mail or phone. You can review your account and also request a refund.
The alternative mobile apps of PayPal is Venmo and Zelle. Venom, a subsidiary of PayPal, acts as a digital wallet. You can send or receive money directly from the linked bank account, credit card, debit card or Venmo balance using a mobile. There is no monthly or annual fee except the premium charge for extra benefits.
The sending limit in Venmo is $299.99 and the weekly ceiling limits $4999.99. So, no scope for overspending. Whereas in Zelle, $1000 in 24hours or $10,000 in a month.
Payment Using Mobile Wallet – Apple Pay
The mobile wallet is a virtual way to store your payment information. You can link your bank account to the wallet and then use the wallet to pay. The widely used mobile wallets are Apple Pay, Android Pay, Google Pay and Samsung Pay.
The most popular mobile wallet is Apple Pay. You can send or request payment in a message with Apple Pay. Once you received money, it’s added to your Apple Cash Card wallet.
The mobile wallets are secured as it encrypts your information. You can’t lose your mobile wallets like the physical wallet or debit/credit card. Better use your fingerprint or facial id to sign in/open the wallet.
While you’re using the mobile wallet, keep tracking. Otherwise, you’ll start overspending. Research showed people spend 23% more on purchasing using the wallet. So, don’t be tempted. Once you’ve finished your budgeting amount, stop using the wallet for the month.
There are some money-saving apps for you to stay on budget. Thie online budgeting apps will keep you stay away from losing money. The top money-saving apps are
- Qapital– provides you the idea to save money to achieve goals.
- Mint– helps to develop a budget for an emergency fund and retirement purpose. It keeps you stay within the limit to avoid the loss or late fees.
- Acorns– rounds up your purchase and helps your savings invested in exchange-trading funds.
- Walla.by– helps you to understand how to use a credit card or maximize the reward getting from the card. It also keeps track of your credit card.
- Chime etc.
Why Should You Stick to A Budget?
The motivation behind sticking to a budget is to plan for e better future. If you have a financial dream, budget is the first step. It gives you control over your money.
There are certain reasons for you want to stick to your budget.
- Missing a payment on Credit Card: You need to pay your credit card bills within the billing cycle. When you miss your payment, you’ll be charged a penalty/late fee. The average late fee is $36 and a maximum of $39. Also, missing payment costs you high-interest fees on your balance. So, you may need a budget to spend your money.
- Debit Card Interest Rest: Debit card charges an interest fee if your balance falls below zero. The debit card directly deducts money from your bank account. The interest rate is more than credit card as high as 4%.
- Fraud and Hacking: Digital era has the biggest issue of fraud. Hackers can easily access your bank details and draw all your money. Though, debit card and credit card comes with a higher fraud detection system. Still, many cases of fraud and hacking have been reported.
- Cash Payment: It is safe to use cash directly to pay. You can send money orders or use a cashier’s check to pay the bills. But people often tend to spend more money than they need while shopping. Better don’t carry too much cash with you. Thus, you can stick to your monthly budget.
Also, you can go for the envelope method to keep a fixed amount for every purchase or pay. Consequently, you can save money.
- Payment in E-Commerce: You must love shopping online websites. They give you options for online payment. But as you are alert of hacking or fraud, you can go for the safest payment. You generate a cash invoice to pay cash on delivery. While you’re paying cash, you know how much you have. So, don’t spend extra. Thus, stick to a budget.
If you want to have enough money, better start planning of saving it. Staying within a budget helps you to be financially healthy. You must understand where your money is going. Once you realize it, you can restrain yourself from wasting or overspending it. Budgeting your personal expenses may sound boring. However, this helps to spend a precise amount. Different payment methods have different pros and cons. You need to choose carefully before proceeding with your amount. To pay $20 for a cup of coffee, you can pay by cash. Whereas, to transfer $10,000 instantly, use online apps.