Paying using a contactless card is so easy: as no PIN is needed, you just waive or tap your card or your phone when you get to the check-out and you’re done. If you regularly pay this way, you are not alone – it is reported that one-in-five card payments are now contactless. Shops, pubs and cafes love this as it speeds up the queues. So why can this be considered as a ‘money danger’?
With contactless, it is very easy to lose track of what you paid for and when, which is a problem if you’re trying to manage your money more effectively. You can almost forget that you’re spending any money – until all those transactions start to appear in your bank account a few days later, typically with a longer delay than your PIN-enabled purchases. Although the limit for contactless payments is £30, you may find that you make lots of smaller purchases here and there, which can soon add up. Many of these are could be impulse buys i.e. purchases that you weren’t expecting to make (and probably didn’t budget for) such as coffees, snacks, magazines, clothes, etc.
Back to basics
However, a regular money MOT can keep you on the right tracks with your spending. Log on to your online bank account or dig out your last few bank statements and go through them to see where and when you spend your money. If you can’t remember what all of your transactions were for (or if you can remember, but it was something you didn’t need), this is a sure sign of why your budget isn’t working.
Ditch the plastic
If you find it difficult to resist the lure of contactless, try taking out your spending money for the week in one instalment from the cashpoint and then seeing how far you can stretch it. Leave your card at home, or give it to a reliable friend to look after if you don’t trust yourself. Don’t forget to hang on to any receipts and make a note of any purchases that you make. By avoiding plastic and using good old-fashioned cash instead, you may find that this helps to remind you how much you are spending.
You can find further guidance on budgeting and money management in this blog, but if you would like some help in setting up a budget, please contact the Financial Guidance team. If you have any useful tips for budgeting, we would love to hear about them; we’ll feature the best ones on the blog.