Extension News

Do Mobile Wallets Make You Spend More Money?

I just got a new phone and even though it is just like my old phone it has updates and apps that make it more user friendly. It was much easier syncing it to my car, updating passwords and it even has the face reconition for log on. Who would have guessed we can now hold the phone to our face and it reconizes us so we can get into our phone to make a call, take a picture, spend money or just browse.

Swipe. Tap. Scan. Ding. You just spent $575.50, and you didn’t even feel it, did you?

How the heck did that hapwwpen? Nope, it wasn’t spent on a credit card. This money was spent with the super easy swipe, tap, scan and ding of your mobile wallet.

After reading this article “Do Mobile Wallets Make You Spend More Money?” from Dave Ramsey’s Newsletter, I decided this would be a good article for this week’s radio program/ newspaper. Here are some excerpts from it.

What Is a Mobile Wallet?

A mobile wallet is a virtual way of storing payment information (like your bank account) that lets you pay for things just by scanning your device or mobile pay app on your cell phone. And sometimes you don’t even need a password or a second action to make the purchase. Most of the time it’s as easy as just scanning your finger (or even your face!). One little move and that item is yours.

It sounds out-of-thisworld convenient (it is), but it can make overspending a little too convenient if you aren’t careful.

How Does a Mobile Wallet Work?

After you link the mobile wallet to a bank account, the virtual wallet will start using that account each time you make a purchase. You can pretty much set it and forget it. It works like cash or debit, but the feeling you have when you pay for something is different.

Think about it: When you actually hand over a $20 bill to the cashier, you feel it leaving your wallet. You know you just spent money. There’s friction there. You feel it in your gut.

With mobile pay, that feeling isn’t there. You could spend hundreds of dollars with just the scan of your finger and never even feel that you actually spent any money! Spoiler alert, that’s bad.

Do Mobile Wallets Encourage Overspending?

They can. But let’s make this clear first, using a cashless payment does not automatically mean you’re going to overspend. Who’s in control of your spending habits anyway? You are! So that means you’re in charge of making sure you budget and don’t go overboard.

That said, these mobile wallets do make it ridiculously easy to spend more money than you mean to. That’s because it’s convenient as heck. And anytime you remove the friction of actually feeling it when you spend money, look out. Add the ease, take away the friction, and it’s the perfect storm for overspending.

But think about it: It’s a pretty genius move on the part of the businesses, really. The easier they can make it for someone to buy something, the more that someone will probably spend. And the more a customer spends, the more money the business makes.

Here’s the thing: Mobile wallets aren’t evil or anything. But it’s the way you go about spending the money that can get you into a mess quick. Remember, the easier it is to spend money, the easier it is to get into trouble—fast.

If you do use a mobile wallet, just be sure to track the purchases in your check register, quick books or whatever you use to keep track of spending.

Once you’ve used the amount you budgeted for the month, that’s it. Don’t be tempted to spend more using your mobile wallet. Treat it just like anything else you budget for, and it will be way easier not to overspend. You’ve got this!

Using a cashless payment isn’t magic. It’s pulling money from your bank account with every single swipe, tap and scan. You’re not spending fake Monopoly money here. It’s your own real, hard-earned cash. Heck, even spending money in Monopoly hurts more than using a mobile wallet does.

“Knowledge for Life” provided by Phillips-Rooks Extension District #5 and K-State Research and Extension.