Whatâ€™s In Your Purse or Wallet? Simple Money Management Tips
Recent survey findings reveal American women, on average, spend as much as $160 on a handbag and own about 11 handbags. Nearly 1Â in 10 women has spent more than $400. Ten percent of women have more than 20 bags in their closet and 1 in 5 women areÂ actually holding onto their handbags because they’ve spent so much money on them. Robin A. Young, a certified financial planner, believes that the value of a purse as well as the contents carried inside of it each day “says a lot about who you are and how you manage your money.”
What’s more, multiple studies show about 7 in 10 Americans have at least one credit card, with the average number of credit cards owned being three to four. If you have more than two (not counting debit cards), you’re likely overspending and incurring debt. “You really should be using cash or a debit card, which would indicate that you’re living within your means,” Young says.
What’s In Your Purse?
Here’s a quick exercise you can do. Add up the value of your purse and its contents. For example, if your purse cost $500, your smartphone $350, your wallet $200, your cosmetics $250, and your iPad $750, then the value is $2,050. Now, ask yourself if you’ve invested that same amount into savings or retirement accounts, including your 401(k) plan, over the last month? If you have indeed invested at least $2,050 in the last 30 days, then you are building wealth, Young explains.
What’s In Your Wallet?
Open your wallet and look at how your cash is organized. Is it ordered by denomination with bills facing the same way? You should store small bills in the front with larger bills in the back or vice versa. Or keep smaller bills on one side and larger bills on the other side of your wallet.
Cash that’s arranged and in order is characteristic of a person whose financial life is organized. Not to mention that it’s easier to count when making purchases. Cash in disarray reflects a disorganized financial life. “It is hard to have abundance when your money isn’t in order and financial papers are all over the place,” Young adds. “Organize your cash, financial files, documents, and accounts.”
Rewards vs. Risks of Credit Card Use
You should have one credit card that you use to, say, rent a car or pay for a trip, with the goal of paying off that card in 30 days. Most people have credit cards that offer benefits such as cash-back rewards, merchant discounts, and airline mileage points. That’s fine as long as you aren’t carrying large balances.
Say, for instance, you have five cards with a credit limit of $5,000 and each has a balance of $2,500, your total debt is $12,500. You have used 50% of your available credit, which affects your FICO score. You need to put away those cards, stop using them, and pay them off. As a rule of thumb, financial experts suggest keeping your credit utilization around 20% to 30%.
For anyone practicing healthy habits, Young stresses that every day you need to be aware of how much money you have in your purse or wallet, checking, and savings account.