Some people love to live a life of thrift.

It’s a challenge they tackle with gusto. Shaving down expenses with couponing, hunting the best deals with an app on their phones, or simply finding creative ways to reuse a cardboard box, gives them a thrill. For others, budgeting conjures up images of living in tents, foraging for nuts and berries in the woods, and sewing together everyone’s old t-shirts to make a blanket for grandma.

To each their own! But budgeting doesn’t have to be faced like a wilderness survival reality TV competition. Sure, there might be some sacrifice and compromise involved when you first implement your budget (giving up that daily $6 latte might feel like roughing it at first), but rest assured there’s a happy middle to most things, and a way that won’t make you hate adhering to your financial goals.

Simplifying the budgeting process can help ease the transition. Check out the following suggestions to make living on a budget something you can stick to – instead of making a shelter out of sticks.

Use that smartphone. Your parents may have used a system of labeled envelopes to budget for various upcoming expenses. Debit cards have largely replaced cash these days, and all those labeled envelopes were fiddly anyway. Your best budgeting tool is probably in your pocket, your purse, or wherever your smartphone is at the moment.

Budgeting apps can connect to your bank account and keep track of incoming and outgoing cash flow, making it simple to categorize current expenses and create a solid budget. A quick analysis of the data and charts from the app can give you important clues about your spending behavior. Maybe you’ll discover that you spent $100 last week for on-demand movies. $5 here and $10 there can add up quickly. Smartphone apps can help you see (in vivid color) how your money could be evaporating in ways you might not feel on a day-to-day basis.

Some apps give you the ability to set a budget for certain categories of spending (like on-demand movies), and you can keep track of how you’re doing in relation to your defined budget. Some apps even provide alerts to help keep you aware of your spending. And if you’re feeling nostalgic, there are even apps that mimic the envelope systems of old, but with a digital spin.

Plan for unexpected expenses. Even with modern versions of budgeting, one of the biggest risks for losing your momentum is the same as it was in the days of the envelope system: unexpected expenses. Sometimes an unexpected event – like car trouble, an urgent home repair, or medical emergency – can cost more than we expected. A lot more.

A good strategy to help protect your budget from an unexpected expense is an Emergency Fund. It may take a while to build your Emergency Fund, but it will be worth it if the tire blows out, the roof starts leaking, or you throw your back out trying to fix either of those things against your doctor’s orders.

The size of your Emergency Fund will depend on your unique situation, but a goal of at least $1,000 to 3 months of your income is recommended. Three months of income may sound like a lot, but if you experience a sudden loss of income, you’d have at least three full months of breathing room to get back on track.

Go with the flow. As you work with your new budget, you may find that you miss the mark on occasion. Some months you’ll spend more. Some months you’ll spend less. That’s normal. Over time, you’ll have an average for each expense category or expense item that will reveal where you can do better – but also where you may have been more frugal than needed.

With these suggestions in mind, there is no time like the present to get started! Make that new budget, then buy yourself an ice cream or turn on the air conditioning. Once you know where you stand, where you need to tighten up on spending, and where you can let loose a little, budgeting might not seem like a punishment. In fact, you might find that it’s a useful, much-needed strategy that you CAN stick to – all part of the greater journey to your financial independence.

For many people, when purchasing items with a debit card or credit card, the only difference for them may boil down to simply entering a PIN code or scribbling a signature.

But what really is the difference? The answer may be a little complicated, largely due to misnomers and a blending of terms used by the public. Read on to see what the difference actually is.

A clarification of terms. The words credit, debit, and cash seem to be used so loosely by the general public that many people seem confused by what the difference is between them. But in accounting and finance, they have very specific meanings. For our purposes, cash is money that you can spend immediately. It can be cold hard currency of course – bills and coins which you might have in your hand or in your wallet – or cash can refer to the balance in your checking account. This is money that you own, and you can withdraw all of it right now, electronically or physically.

Credit is basically someone’s willingness to accept an IOU from you. Here we will use it as a noun. Buying on credit means the seller trusts the buyer to hand over cash – money which is spendable right now – in the future. Debit, on the other hand, is a verb, and it means to deduct an amount from a cash balance immediately (often a bank account balance). Of course, credit can also be a verb (meaning to add to a cash balance immediately). This mixing of verbs and nouns can make the distinction of the terms in everyday use difficult.

Cash is money you can spend right now, electronically or physically. Credit is an agreement to pay cash later. Debit is a verb that means to subtract cash from a balance right away.

When money is due. The major difference between credit and debit cards is the time when cash must be paid. Credit cards, standing in for a promise to pay cash later, allow one to purchase things even if said person has no cash immediately available. For example, if you need to buy some clothes for a new job, you might only have enough cash on hand to purchase one outfit. You may not receive any more cash until you get your first paycheck in two weeks. But you probably wouldn’t want to wear the same outfit every day for two weeks. What can you do?

This is when credit comes in handy: you buy all the outfits you need now, while making a promise to pay the credit card company back in the future. You receive your outfits immediately even though you don’t technically have enough cash yet. You need to complete some work before you receive the money, but the credit card company accepts your IOU in place of cash for the time being.

On the other hand, if you use a debit card to pay for the clothes, the cash will be deducted immediately from your bank account. Remember, the balance of your bank account is cash in financial terms because it is spendable right now. When you enter your PIN code, the bank checks that you have enough money to make the purchase immediately and, if you do, the bank authorizes the transaction. If you need new shoes for your job but don’t have enough money in your bank account, you won’t be able to use a debit card.

Interest rates for using credit cards. Why would anyone ever want to use debit if they could use credit? One reason is budgeting and discipline. However, a stronger reason can be interest: promising to pay later may come at a price, and that price is called interest. Credit card companies do not make these short term loans out of the goodness of their hearts. They do it for profit. If you borrow money for a little while – i.e., you take money and promise to pay it back later – you will have to compensate the bank, seller, or credit card company for that ability. Thus we potentially pay interest with credit cards but not with debit cards.

Why don’t we pay interest on debit cards? Well, because the money is already yours, of course.

Some could say “never!” but there might be situations in which using a credit card may be the option you want to go with.

Many families use credit with good intentions – and then life happens – surprise expenses or a change in income leave them struggling to get ahead of growing debt. To be fair, there may be times to use credit and times to avoid using credit.

Purchasing big-ticket items. A big-screen TV or a laptop purchased with a credit card may have additional warranty protection through your credit card company. Features and promotions vary by card, however, so be sure to know the details before you buy. If your credit card offers reward points or airline miles, big-ticket items may be a faster way to earn points than making small purchases over time. Just be sure to have a plan to pay off the balance.

Travel and car rental. For many families, these two items go hand in hand. Credit cards sometimes offer additional insurance protection for your luggage or for the trip itself. Your credit card company may offer some additional protection for car rentals. You might score some extra airline miles or reward points in this category as well because the numbers can add up quickly.

Online shopping. Credit card and debit card numbers are being stolen all the time. Online merchants can have a breach and not even be aware that your credit card info is out in the wild. The advantage of using a credit card as opposed to a debit card is time. You’ll have more time to dispute charges that aren’t yours. If your debit card gets into the wrong hands, someone might be quickly spending your mortgage money, food and gas money, or college tuition for your kids. Credit cards may be a better choice to use online because the effects of fraud don’t have an immediate impact on your bank balance.

Legitimate emergencies. Life happens and sometimes we don’t have enough readily available cash to pay for emergencies. Life’s emergencies can range from broken appliances to broken cars to broken bones and in these cases, you may not have any other viable options for payment.

Using credit isn’t necessarily a bad thing. In fact, if you plan carefully, you may reap several types of benefits from using credit cards and still avoid paying interest. You’ll have to pay off the balance right away to avoid finance charges, though. So, always think twice before you charge once.

Some credit cards offer consumer benefits, like extended warranties, extra insurance, or even rewards. There are some situations in which using a credit card may come in handy.

Nearly one quarter of Americans and almost half of Canadians have no emergency savings, according to a recent report. (1&2)

Without an emergency fund, you can imagine that an unexpected expense could send your budget into a tailspin. That’s why building an emergency fund is so important. You CAN do this!

4 tips to building your emergency fund

Where to keep your emergency fund. Keeping money in the cookie jar might not be the best plan. Mattresses don’t really work so well either. But you also don’t want your emergency fund “co-mingled” with the money in your normal checking or savings account. The goal is to keep your emergency fund separate, clearly defined, and easily accessible. Setting up a designated, high-yield savings account is a good option that can provide quick access to your money while keeping it separate from your main bank accounts.

Set a monthly goal for savings. Set a monthly goal for your emergency fund savings, but also make sure you keep your savings goal realistic. If you choose an overly ambitious goal, you may be less likely to reach that goal consistently, which might make the process of building your emergency fund a frustrating experience. (Your emergency fund is supposed to help reduce stress, not increase it!) It’s okay to start by putting aside a small amount until you have a better understanding of how much you can really “afford” to save each month. Also, once you have your high-yield savings account set up, you can automatically transfer funds to your savings account every time you get paid. One less thing to worry about!

Spare change can add up quickly. The convenience of debit and credit cards means that we use less cash these days – but if and when you do pay with cash, take the change and put it aside. When you have enough change to be meaningful, maybe $20 to $30, deposit that into your emergency fund. Look into ways of automating your savings to make putting away money seamless and hassle free!

Get to know your budget. Making and keeping a budget may not always be the most enjoyable pastime. But once you get it set up and stick to it for a few months, you’ll get some insight into where your money is going, and how better to keep a handle on it! Hopefully that will motivate you to keep going, and keep working towards your larger goals. When you first get started, dig out your bank statements and write down recurring expenses, or types of expenses that occur frequently. Odds are pretty good that you’ll find some expenses that aren’t strictly necessary. Look for ways to moderate your spending on frills without taking all the fun out of life. By moderating your expenses and eliminating the truly wasteful indulgences, you’ll probably find money to spare each month and you’ll be well on your way to building your emergency fund.

Debit cards are convenient.

Just swipe and go. Even more so for their mobile phone equivalents. We like fast, we like easy, and we like a good sale. But are we actually spending more by not using cash like we did in the good old days?

When using plastic, the reality of the expense doesn’t sink in until the statement arrives. And even then it may not carry the same weight. After all, you only need to make the minimum payment, right? With cash, we’re more cautious – and that’s not a bad thing.

Try an experiment for a week: pay only with cash. When you pay with cash, the expense feels real – even when it might be relatively small. Hopefully, you’ll get a sense that you’re parting with something of value in exchange for something else. You might start to ask yourself things like “Do I need this new comforter set that’s on sale – a really good sale – or, do I just want this new comforter set because it’s really cute (and it’s on sale)?” You might find yourself paying more attention to how much things cost when making purchases, and weighing that against your budget.

If you find that you have money left over at the end of the week (and you probably will because who likes to see nothing when they open their wallet), put the cash aside in an envelope and give it a label. You can call it anything you want, like “Movie Night,” for example.

As the weeks go on, you’re likely to amass a respectable amount of cash in your “rewards” fund. You might even be dreaming about what to do with that money now. You can buy something special. You can save it. The choice is yours. Well done on saving your hard-earned cash.

Credit cards aren’t free money — that should go without saying, but millions of Americans don’t seem to have received that memo.

Americans now owe a record $1.04 trillion in credit card debt.¹ If you’re not careful, credit card debt could hurt your credit score, wipe out your savings, and completely alter your personal financial landscape.

So: debt, debit, both, or neither? Before you apply for that next piece of plastic, here’s what you need to watch out for.

Low interest rates. Credit card companies spend a lot of money on marketing to try to get you hooked on an offer. Often you hear or read that a company will tout an offer with a low or zero percent APR (Annual Percentage Rate). This is called a “teaser rate.”

Sounds amazing, right? But here’s the problem: This is a feature that may only last for 6–12 months. Ask yourself if the real interest rate will be worth it. Credit card companies make a profit via credit card interest. If they were to offer zero percent interest indefinitely, then they wouldn’t make any money.

Make sure you read the fine print to determine whether the card’s interest rate will be affordable after the teaser rate period expires.

Fixed vs. variable interest rates. Credit cards will operate on either a fixed interest rate or a variable interest rate.² A fixed interest rate will generally stay the same from month to month. A variable interest rate, by contrast, is tied to an index (fancy word for interest rate) that moves with the economy. Normally the interest rate is set to be a few percentage points higher than the index.

The big difference here is that while a fixed rate may change, the credit card company is required to inform its customers when this happens. While a variable APR may start out with a lower interest rate, it’s not uncommon for these rates to fluctuate. What’s more, the credit card company isn’t required to tell you about a variable rate change at all!³

Low interest rates are usually reserved for individuals who have great credit with a long credit history. So, if you’ve never owned a credit card (or you are recovering from a negative credit history) this could be a red flag.

Of course, you could avoid these pitfalls altogether if you pay off your credit card balance before the statement date. Whatever the interest rate, be sure you’re applying for a credit card that’s affordable for you to pay off if you miss the payoff due date.

High credit limits. While large lines of credit are usually reserved for those with a good credit history, a new cardholder might still receive an offer for up to a $10,000 credit limit.

If this happens to you, beware. While it may seem like the offer conveys a great deal of trust in your ability to pay your bill, be honest with yourself. You may not be able to recover from the staggering size of your credit card debt if you can’t pay off your balance each month.

If you already have a card with a limit that feels too high, it may be in your interest to request that the company lower your card’s limit.

Late fees. So you’re late paying your credit card bill. Late payments not only have the potential to hurt your credit score, but some credit cards may also assess a penalty APR if you haven’t paid your bill on time.

Penalty APRs are incredibly high, usually topping out at 29.99%.⁴ The solution here is simple: pay your bill on time or you might find self paying ridiculous interest rates!

Balance transfer fees. It’s not uncommon for a cardholder to transfer one card’s balance to another card, otherwise known as a balance transfer. This can be an effective way to pay off your debt while sidestepping interest, but only if you do so before the card’s effective rate kicks in. And, even if a card offers zero interest on balance transfers, you still may have to pay a fee for doing so.

Whatever type of credit card you choose, the only person responsible for its pros and cons is you. But if you’re thrifty and pay attention to the bottom line, you can help make that credit card work for your credit score and not against it.

It’s never a bad idea to prepare for a financial emergency.

Unexpected expenses, market fluctuations, or a sudden job loss could leave you financially vulnerable. Here are some tips to help you get ready for your bank account’s rainy days!

Know the difference between a rainy day fund and an emergency fund … but have both! People often use the terms interchangeably, but there are some big differences between a rainy day fund and an emergency fund. A rainy day fund is typically designed to cover a relatively small unexpected cost, like a car repair or minor medical bills. Emergency funds are supposed to help cover expenses that might accumulate during a long period of unemployment or if you experience serious health complications. Both funds are important for preparing for your financial future—it’s never too early to start building them.

Tackle your debt now. Just because you can manage your debt now doesn’t mean you’ll be able to in the future. Prioritizing debt reduction, especially if you have student loans or credit card debit, can go a long way toward helping you prepare for an unexpected financial emergency. It never hurts to come up with a budget that includes paying down debt and to set a date for when you want to be debt-free!

Learn skills to bolster your employability. One of the worst things that can blindside you is unemployment. That’s why taking steps now to help with a potential future job search can be so important. Look into free online educational resources and classes, and investigate certifications. Those can go a long way towards diversifying your skillset (and can look great on a resume).

None of these tips will do you much good unless you get the ball rolling on them now. The best time to prepare for an emergency is before the shock and stress set in!

There’s no doubt that credit card debt is a huge financial burden for many Americans.

On average, each household that has revolving credit card debt owes $6,741 (1). It might be tempting to see those numbers and decide to throw out your credit cards entirely. After all, why hang on to a source of temptation when you could make do with cash or a debit card? However, keeping a credit card around has some serious benefits that you should consider before you decide to free yourself from plastic’s grasp.

You might have bigger debts to deal with. On average, credit card debt is low compared to auto loans ($27,934), student loans ($46,679), and mortgages ($192,618) (2). Simply put, you might be dealing with debts that cost you a lot more than your credit card. That leaves you with a few options. You can either start with paying down your biggest debts (a debt avalanche) or get the smaller ones out of the way and move up (a debt snowball). That means you’ll either tackle credit card debt first or wait while you deal with a mortgage payment or student loans. Figure out where to start and see where your credit card fits in!

Ditching credit cards can lower your credit score. Credit utilization and availability play a big role in determining your credit score (3). The less credit you use and the more you have available, the better your score will likely be. Closing down a credit card account may drastically lower the amount of credit you have available, which then could reduce your score. Even freezing your card in a block of ice can have negative effects; credit card companies will sometimes lower your available credit or just close the account if they see inactivity for too long (4). This may not be the end of the world if you have another line of credit (like a mortgage) but it’s typically better for your credit score to keep a credit card around and only use it for smaller purchases.

It’s often wiser to limit credit card usage than to ditch them entirely. Figure out which debts are costing you the most, and focus your efforts on paying them down before you cut up your cards. While you’re at it, try limiting your credit card usage to a few small monthly purchases to protect your credit score and free up some extra funds to work on your other debts.

Need help coming up with a strategy? Give me a call and we can get started on your journey toward financial freedom!

When it comes to building wealth and managing finances well enough to live comfortably, it’s up to your participation in a long-term financial strategy, which – more often than not – depends on creating healthy financial habits NOW.

Check out these ideas on how you can do it!

Automate it
Fortunately for us, we live in the electronic age, which can make streamlining financial goals a lot easier than in decades past. Whether building savings, investing for the future, paying down debt, or any other goals, take advantage of the apps and information available online. Savings can be put on autopilot, taking a fixed amount from your bank account each month or each pay period. The same can be done for IRAs or other investment accounts. Many mobile apps offer to automatically round up purchases and invest the spare change. (Hint: Compare your options and any associated fees for each app.)

Be mindful of small purchases
It can be much easier to be aware of making a large purchase (physically large, financially large, or both). Take a physically large purchase, for instance: it’s difficult to go into a store and come out with a washing machine and not have any memory of it. And for large financial purchases like a laptop or television, some thought usually goes into it – up to and including how it’s going to get paid for. But small, everyday purchases can add up right under your nose. Ever gone into a big box store to grab a couple of items then left having spent over $100 on those items… plus some throw pillows and a couple of lamps you just had to snag? What about that pricey cup of artisan coffee? Odds are pretty good that the coffee shop has some delicious pastries, too, which may fuel that “And your total is…” fire. $100 here, $8.50 there, another $1.75 shelled out for a bottle of water – the small expenses can add up quickly and dip right into the money that could go toward your financial strategy.

Paying with plastic has a tendency to make the tiny expenses forgettable… until you get that credit card bill. One easy way to cut down on the mindless purchases is to pay in cash or with a debit card. The total owed automatically leaves your wallet or you account, perhaps making the dwindling amount you have to set aside for your financial future a little more tangible.

Do what wealthy people do
CNBC uncovered several habits and traits that are common among wealthy individuals. Surprisingly, it wasn’t all hard work. They found that wealthy people tend to read – a lot – and continue learning through reading.¹ Your schedule may not allow for as much reading time as the average billionaire – maybe just 30 minutes a day is a good short-term goal – but getting in more reading can help you improve in any area of life!

Another thing wealthy people do? Wake up early. This may help you find that extra 30 minutes for reading. You’ll get more done in general if you get up a little earlier. A 5-year study of self-made millionaires revealed that nearly 50% of this industrious group woke up at least 3 hours before their work day started.²

Making these healthy financial habits a part of your regular routine might take some time and effort, but hang in there. Often, success is about the mindset we choose to have. If you stay the course and learn from those who’ve been where you are, you can experience the difference that good habits can make as you keep moving toward financial independence!

Both Americans and Canadians each owe more than $1 trillion in credit card debt.

You read that right: more than $1 trillion.

That number is up 6.2% in the US and 6% in Canada from 1 year ago. At this rate, it seems like more and more people are going to end up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

• Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
• Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
• Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

For many people, when purchasing items with a debit card or credit card, the only difference for them may boil down to simply entering a PIN code or scribbling a signature.

But what really is the difference? The answer may be a little complicated, largely due to misnomers and a blending of terms used by the public. Read on to see what the difference actually is.

A clarification of terms
The words credit, debit, and cash seem to be used so loosely by the general public that many people seem confused by what the difference is between them. But in accounting and finance, they have very specific meanings. For our purposes, cash is money that you can spend immediately. It can be cold hard currency of course – bills and coins which you might have in your hand or in your wallet – or cash can refer to the balance in your checking account. This is money that you own, and you can withdraw all of it right now, electronically or physically.

Credit is basically someone’s willingness to accept an IOU from you. Here we will use it as a noun. Buying on credit means the seller trusts the buyer to hand over cash – money which is spendable right now – in the future. Debit, on the other hand, is a verb, and it means to deduct an amount from a cash balance immediately (often a bank account balance). Of course, credit can also be a verb (meaning to add to a cash balance immediately). This mixing of verbs and nouns can make the distinction of the terms in everyday use difficult.

• Cash is money you can spend right now, electronically or physically.
• Credit is an agreement to pay cash later.
• Debit is a verb that means to subtract cash from a balance right away.

When money is due
The major difference between credit and debit cards is the time when cash must be paid. Credit cards, standing in for a promise to pay cash later, allow one to purchase things even if said person has no cash immediately available. For example, if you need to buy some clothes for a new job, you might only have enough cash on hand to purchase one outfit. You may not receive any more cash until you get your first paycheck in two weeks. But you probably wouldn’t want to wear the same outfit every day for two weeks. What can you do?

This is when credit comes in handy: you buy all the outfits you need now, while making a promise to pay the credit card company back in the future. You receive your outfits immediately even though you don’t technically have enough cash yet. You need to complete some work before you receive the money, but the credit card company accepts your IOU in place of cash for the time being.

On the other hand, if you use a debit card to pay for the clothes, the cash will be deducted immediately from your bank account. Remember, the balance of your bank account is cash in financial terms because it is spendable right now. When you enter your PIN code, the bank checks that you have enough money to make the purchase immediately and, if you do, the bank authorizes the transaction. If you need new shoes for your job but don’t have enough money in your bank account, you won’t be able to use a debit card.

Interest rates for using credit cards
Why would anyone ever want to use debit if they could use credit? One reason is budgeting and discipline. However, a stronger reason can be interest: promising to pay later may come at a price, and that price is called interest. Credit card companies do not make these short term loans out of the goodness of their hearts. They do it for profit. If you borrow money for a little while – i.e., you take money and promise to pay it back later – you will have to compensate the bank, seller, or credit card company for that ability. Thus we potentially pay interest with credit cards but not with debit cards.

Why don’t we pay interest on debit cards? Well, because the money is already yours, of course.

Some could say “never!” but there might be situations in which using a credit card may be the option you want to go with.

Many families use credit with good intentions – and then life happens – surprise expenses or a change in income leave them struggling to get ahead of growing debt. To be fair, there may be times to use credit and times to avoid using credit.

Purchasing big-ticket items
A big-screen TV or a laptop purchased with a credit card may have additional warranty protection through your credit card company. Features and promotions vary by card, however, so be sure to know the details before you buy. If your credit card offers reward points or airline miles, big-ticket items may be a faster way to earn points than making small purchases over time. Just be sure to have a plan to pay off the balance.

Travel and car rental
For many families, these two items go hand in hand. Credit cards sometimes offer additional insurance protection for your luggage or for the trip itself. Your credit card company may offer some additional protection for car rentals. You might score some extra airline miles or reward points in this category as well because the numbers can add up quickly.

Online shopping
Credit card and debit card numbers are being stolen all the time. Online merchants can have a breach and not even be aware that your credit card info is out in the wild. The advantage of using a credit card as opposed to a debit card is time. You’ll have more time to dispute charges that aren’t yours. If your debit card gets into the wrong hands, someone might be quickly spending your mortgage money, food and gas money, or college tuition for your kids. Credit cards may be a better choice to use online because the effects of fraud don’t have an immediate impact on your bank balance.

Legitimate emergencies
Life happens and sometimes we don’t have enough readily available cash to pay for emergencies. Life’s emergencies can range from broken appliances to broken cars to broken bones and in these cases, you may not have any other viable options for payment.

Using credit isn’t necessarily a bad thing. In fact, if you plan carefully, you may reap several types of benefits from using credit cards and still avoid paying interest. You’ll have to pay off the balance right away to avoid finance charges, though. So, always think twice before you charge once.

Some credit cards offer consumer benefits, like extended warranties, extra insurance, or even rewards. There are some situations in which using a credit card may come in handy.

Perusing the search engine results for “allowance for kids” reveals something telling: The top results don’t seem to agree with each other.

Some finance articles quote experts or outspoken parents hailing an allowance, stating it teaches kids financial responsibility. Others seem to argue that simply awarding an allowance (whether in exchange for doing chores around the house or not) instills nothing in children about managing money. They say that having honest conversations about money and finances with your kids is a better solution.

According to a recent poll, the average allowance for kids age 4 to 14 is just under $9 per week, about $450 per year.[i] By age 14, the average allowance is over $12 per week. Some studies seem to indicate that, in most cases, very little of a child’s allowance is saved. As parents, we may not have needed a study to figure that one out – but if your child is consistently out of money by Wednesday, how do you help them learn the lesson of saving so they don’t always end up “broke” (and potentially asking you for more money at the end of the week)?

There’s an app for that.
Part of the modern challenge in teaching kids about money is that cash isn’t king anymore. Today, we use credit and debit cards for the majority of our spending – and there’s an ever-increasing movement toward online shopping and making payments with your phone using any of the apps that are available.

This is great for the way we live our modern, fast-paced lives, but what if technology could help us teach more complex financial concepts than a simple allowance can – concepts like how compound interest on savings works, or what interest costs for debt look like? As it happens, a new breed of personal finance apps for families promises this kind of functionality. Just look at your app store!

Money habits are formed as early as age 7.[ii] If an allowance can teach kids about saving, compound interest, loan interest, and budgeting – with a little help from technology – perhaps the future holds a digital world where the two sides of the allowance debate can finally agree. As to whether your kid’s allowance should be paid upon completion of chores or not… Well, that’s up to you and how long your Saturday to-do list is!