In 2023, someone can receive their paychecks, pay their bills, fund their retirement, invest in their short and long-term goals, and pay a friend back for covering lunch…. without touching cash.
With instant access to online shopping, mobile payment apps, and credit cards, it’s all too easy to overspend and lose track of your finances. And aside from a brief lesson in math class, many children growing up today in our digital-driven world aren’t even exposed to cold hard cash.
While digital banking brings tremendous convenience (I know I don’t like paying for my groceries with a stack of 20s), it makes me wonder if we’re running the risk of losing our discipline with money. Furthermore, how are our children and grandchildren going to realize the true value of money, saving, and investing in our digital world?
I think there’s a way to recognize the advantages of the digital revolution while also being cautious about the effects it has on our financial discipline.
Benefits of the Digital Revolution
The digital revolution has brought numerous benefits to our financial lives. One of the most significant advantages is easier access to investing opportunities. From the comfort of your own home, you can invest in stocks, bonds, and other assets.
It’s also never been easier to work with a financial advisor to receive guidance and direction. There are flexible virtual options that allow you to work with anyone in the country on your own schedule.
The digital revolution has also made transactions faster and safer, with the ability to transfer funds securely and instantly between accounts. Apps and tools that make budgeting fun and easy to understand are also becoming increasingly popular, with many offering features such as automated savings, expense tracking, and personalized budgeting advice.
So with the digital revolution increasing and cash use dwindling, how can we teach and stick to good money habits to maintain our financial discipline? I have some ideas that I hope you and your family can benefit from.
4 Money Management Strategies to Improve Your Family’s Financial Discipline
With great technology comes the need for discipline. Staying financially disciplined in a digital world requires conscious effort and mindful spending. As a family, it’s important to create a plan, budget together, hold one another accountable, adapt as life happens, automate your savings, and focus on the big picture.
Financial discipline is a continuous process, and it requires regular monitoring and adjustments to ensure you’re on track. With a little discipline and determination, you can take control of your finances and build a strong financial future for yourself and your family.
Keep these four specific money management strategies in mind as you navigate the world of quick, digital payments:
- Create barriers when online shopping
- Wait 48 hours before making a purchase
- Monitor your credit card payments
- Create visual aids to motivate the whole family
These strategies can all be adapted to a family setting, ensuring you’re instilling good money habits into your life as well as the next generations.
1. Create barriers when online shopping
The digital world has made it incredibly challenging to curb our shopping – we can no longer simply stay home in order to avoid spending money. When we use credit cards, make ACH transfers, and send friends money via peer-to-peer money transfer apps, it can almost feel like we’re dealing with fake money. It’s all swipes, transfers, and digital numbers.
And the incredible convenience online shopping has brought can not be overstated. You’re hungry and want dinner in 20-25 minutes (without cooking)? Order from Uber Eats! Suddenly discover a must-have new book? It will be on your doorstep in 2 days!
Unlike an in-person purchase, online shopping increases the sense of distance between what we’re buying and our real money. It can undermine the value of money and tempt us to overspend (without us realizing it).
To curb this automated spending, try creating barriers with these tips:
- Remove your credit card information from common shopping sites so it doesn’t autofill. The few minutes it takes to find your credit card and enter the information gives you time to carefully consider the purchase.
- Break up with Amazon Prime for a couple of months – you might be surprised at how you don’t need everything within a few days.
- Force yourself to look at the surcharges on meals from services like Uber Eats before submitting your order. This brings mindfulness to your spending by weighing the convenience versus the cost.
- Limit your screen time on certain apps that constantly display ads (I’m looking at you, Instagram!) and instead spend time face-to-face with your loved ones or outside (thankfully Mother Nature doesn’t influence us to spend money).
- Unsubscribe from companies that send constant ad emails.
- Ask for accountability from a trusted friend. Share your money goals with them and make it a rule that you must text them before making a non-essential purchase. And remember to return the favor, if they desire!
- Put a small sticky note on your computer (in a really annoying spot) to remind you to practice mindfulness while shopping online. “Remember your savings goals!” “Do you really need that?” “Go for a walk!” (You can be as gentle or firm with yourself as wanted).
2. Wait 48 hours before making a purchase
In a world of social media influencers and ads just about everywhere we turn, it’s no wonder we often find ourselves hitting “add to cart” for products we didn’t even know existed ten minutes ago.
That’s why waiting 48 hours before purchasing a non-essential product, service, or experience is a wise family rule to implement. This wait time allows you to reflect on whether the item is truly necessary or if it’s an impulse buy that doesn’t align with your budget or values.
This waiting period allows you time to research the product further and compare prices to make sure you’re getting the best deal.
You can also use the 48 hours to reflect on why you want the product or experience. Are you feeling bored? Unfulfilled? Insecure? Oftentimes, our actions are a reflection of what’s happening within, and it’s important to gain insight into those emotions instead of defaulting to a purchase.
3. Monitor your credit card statements
The digital world has made credit cards a prevalent part of our lives. They’re quick, easy to use, and oftentimes bring generous sign-up bonuses and ongoing cash-back rewards.
I’m not advocating that you revert to an all-cash system because I know how cumbersome it can be and some places won’t even accept cash (like your mortgage company). However, I do think it’s valuable to regularly monitor your credit card statements.
This practice can help you identify any subscriptions or recurring charges that you may have forgotten about or no longer need. These can include gym memberships, streaming services, magazine subscriptions, and more.
By reviewing your statements, you can see which services you are paying for each month and decide whether they are worth the cost or if the money is better spent on your long-term financial goals.
If you find that credit cards are tempting you to overspend month after month, then by all means, utilize your debit card or create a cash system! Sometimes the temptation of a credit card is too great and it’s wonderful to recognize that and take away the card altogether.
4. Create visual aids
When money is tucked away in a high-yield savings account, your savings progress can feel nonexistent. Using visual aids to track your savings goals can be a powerful motivator.
By creating a visual representation of your progress, you can see how far you’ve come and how much further you have to go, making your goals feel more achievable and less daunting.
Visual aids can take many forms, such as a chart or graph that tracks your savings over time, a jar or piggy bank that you fill with cash, or even a vision board that represents your financial goals.
This is a great activity to work on as a family. You can display your visual aid prominently in your home to create camaraderie. Imagine your little ones coloring in a section of a Disney castle on the fridge as you save for a Disney vacation! This tangible representation can help your family feel motivated, even in our digital world.
Stay Financially Disciplined with Legacy Planning
At Legacy Planning, we help our clients stay disciplined, make smart financial decisions, and achieve their long-term financial goals. Ongoing support and advice can help you make informed decisions about your finances even amid a rapidly changing digital landscape.
To see if we can help you assess your financial situation, de-risk your finances, build wealth, and create your legacy, click here to schedule a conversation.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.