Monday, April 6, 2015

Online transactions and debt: nature or nurture?

As online transactions continue to evolve and grow, there is an increased interest in how it will affect our budgeting habits. Now that social medias such as Snapchat and Facebook are offering payment options through their sites, the million dollar question becomes: 'How will that affect our money management skills'?

It's been long determined that the more we rely on online banking as a budgeting method, the increased risk we take in losing control of our spending habits. If we don't see the paper money evaporate from our wallets, then it's very easy to lose count of how much we're actually spending. This holds true for online payment options now being offered by social media sites. Even though the funds will be held against our accounts, it's just another opportunity to deliver money without actually monitoring those accounts.

The question becomes is it really the advanced payment options making us careless spenders, or is it how we're wired to be? While most consumers are burdened with needless debt they can't pay off, it's not certain that having access to one payment method or account is driving this debt. We can then assume that it's personal habits or a level of immaturity that makes most consumers spend beyond their needs.

Take for example a New York Times article written by Melinda Gates, where she insists that internet transactions is the answer to helping millions of moms around the world combat poverty. Many of these women do not have access to banking institutions either due to economic, social or cultural reasons, and therefore have no means to safeguard the money they earn. In some situations, these women may need to conceal money from a controlling or abusive spouse, or traditional family members who are against empowering a woman with money. The only alternative these women have is to conduct online banking transactions.

This example shows that there is a benefit to new ways of conducting business. If credit cards and banks were the sole culprits behind our reckless spending habits, then it wouldn't serve a good cause such as helping impoverished women save money. It's easy to accuse banks and creditors of creating a debt addictive society, especially since they do aggressively sell their products. But I'd hate to think what the state of the economy would be without their services.

The answer to that million-dollar-question is: Not all that much, but only if consumers learn to make wise financial decisions. You get there by learning how to manage your money, especially with all the information available on how to accomplish that goal.

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