Are contactless payments costing you more money?

Are easy payments meaning that you're spending more than usual? Could this irreversible movement have unintended consequences on your spending and debt? Let's put this to the test.

Paying cash makes you think twice before spending money

Leading behavioural economists, Professor Nina Mazer and Dilip Soman, believe paying with cash makes us feel more mindful when we're spending money.

For example, when faced with a limited amount of cash in our wallet, we become more self-aware of our spending habits and feel "angst" when paying cash, as we can see how this stash physically decreases with every purchase.

In other words, we have difficulty parting with money when we can actually see it.

Digital spending makes us less emotional

The digital wallet is growing with bitcoin, Google Wallet, Apple Pay etc. There are so many options for consumers. And, according to MoneySuperMarket, over a third of Brits (36%) believe they live this way already, using contactless payments whenever possible.

But, unlike the angst we feel spending cash, there might be relatively little emotion with a digital wallet. It's this lower emotional response that can lead to overspending. And if you don't keep track of your spending habits, it may be challenging to meet financial obligations at the end of the month.

So, how can we be mindful about spending when we've gone digital?

With it becoming easier and easier to access our money, it's important to stay on top of our spending.

Here are 4 easy tips to keep spending (and debt!) under control:

• Set simple spending limits: Not only will you boost your emotional wellbeing about money, you will feel more in control of your money.
• Evaluate how you spend money: Before you tap, swipe, click or confirm, think twice. Try to identify what triggers your spending and try to avoid those triggers e.g. shopping while hungry or sad.
• Use an online app to budget: Track your spending with an app like Monzo. They provide you with a running total during the day which is a great way to see how close you are to your budget.
• Consolidate debt: If you have debt, could you consolidate it? Consolidating debt could help you take control of your finances and reduce monthly repayment amount. See if you could consolidate your debt with a Salary Finance salary-linked loan here. 

The future looks bright. Whether it's Chatbots or apps, artificial intelligence will make it easier to budget, stay on track, control debt and achieve your financial goals. We're almost there!