Building and sustaining good financial behaviors is the key towards developing a healthy future for your finances. A great way to do this is to use prepaid debit cards. How these cards work is you preload them and use them anywhere they accept credit cards. They differ from regular debit cards in that you don't have the option to overdraw the account. As such, they can help you develop good financial behaviors in the following ways.
They Force You to Live Within Your Means
With prepaid debit cards you can only spend what you deposit into the account. This makes them a great way to learn to live within your means. Since you don't have the option to overdraw the account, you must budget your expenses to best fit your situation. Since living within your means is one of the most important behaviors to adopt when building good financial habits, a prepaid debit card is a great way to develop this mentality.
Use Them for Budgeted Expenses
If you struggle to rein in expenses each month consider using prepaid debit cards to help you. As an illustration, say your biweekly grocery amount is $200. You can have $200 of your paycheck directly deposited onto the prepaid debit card of your choice, which you can use to get your grocery items. Once that amount runs out, you don't receive anymore until your next paycheck. This approach is helpful because it forces you to budget the amounts you receive so you don't overspend. It can also help you adopt money saving behaviors such as preparing meals in advance and using coupons to lower your food bill.
Stay Current on Bills
Many lenders and utility companies allow you to pay your bills online. However, if you don't have a bank account, this can be difficult to do. When you sign up for a prepaid debit card, it gives you the ability to make payments online for everything from your credit card to your cable bill. As a good rule of thumb, you should set up automatic payments that way your payee can just pull the funds from your debit card on the due date. This ensures you budget so you have enough for bills and more importantly, that you pay them on time.
A Great Tool for Teaching Kids About Money
One of the best ways to help your children learn healthy money management behaviors is giving them a chance to practice what they learn. You can apply this principal at the age you feel is most appropriate by giving them a prepaid debit card. Allow them to use this card for shopping expenses but preset the limit they can use. This will help you as a parent to manage expenses and it teaches your teen good money sense since they only have so much to use.
Ultimately, prepaid debit cards are great tools you can use to build sound financial behaviors. By using them to make timely payments, for budgeted expenses and to control your children's spending, you can receive the maximum benefit of these cards. In turn, you can use these principles going forward to help you save more of your money.