Examine your wallet, examine your financial life

Have you ever taken a close look at what you put inside your wallet?

The contents of your wallet reflects your financial personality
Our wallets reflect our financial lives because the wallet is the conduit for how we gratify our needs and desires. The typical contents of your wallet are cash, credit/debit cards, bank/ATM cards, name cards, receipts and other miscellaneous nick-knacks. Let's examine our own wallets and see what you can find out about your relationship with personal finance and money.

Cash
This is the most important component for you as you need to pay for your food, bus or train fare or parking if you drive. Your incidental living expenses are paid for using notes (and coins) that are legal tender for a small sandwich to that magazine you read. How much you carry does reflect on your own financial security. When I was a student and receiving pocket money from my parents. My wallet had only two to three days living expenses in it on average. As I started to work and earn my own income. This amount increased a bit more until I can afford for incidental expenses purely on cash.

There is no golden rule for having too much or too little cash so long as you balance the need for necessary cash expenses vs. being spendthrift because your wallet is too heavy with dollars. My own personal experience has been not to have too much money partly to reduce the urge to spend and to maximise returns on cash in savings or investments.

Credit and Debit Cards
Most Singaporeans own at least 2-3 credit cards on average as once you are qualified to own 1, you can own virtually unlimited cards as the unsecured credit industry is extremely competitive with most financial institutions offering to waive the first year card fee. You may want to consider reducing the number of credit cards that you own so that you concentrate your purchases on that one or two cards that give you the most rewards. Alternatively, reducing your cards also reduces the likelihood of whipping out the card and buying your heart's desire on a whim just because you can afford the unsecured credit is not wise. Debit cards may control you a little but it's still your money. Having fewer of these would also be more prudent as you mainly need one Mastercard and one VISA as most retailers offer one or the other of these two major credit card companies.

Name cards / Receipts and Other Knick-Knacks
Have you ever found your wallet to be so thick and fat and it bulges when you put it in your trouser pocket? For ladies, do you find that you need a wallet the size of a small handbag because of the "miscellaneous" stuff that you need to store inside it?

I too am guilty of stuffing miscellaneous name cards, receipts etc into the wallet and carrying it with me for a few months. Ideally, you should do a weekly clearing of your wallet to transfer name card info into a diary or electronic personal digital assistant. In addition, receipts especially of NETS (electronic point of sale) / credit / debit card purchases should be kept in a file and reconcilied against monthly bills or bank statements to track spending. This helps you to know how much you are spending each month and for you to recognise the cash outflows that is happening right in front of you even if the payments is not in the form of notes and coins!

Our wallets reflect our financial personality. What is inside your wallet says a lot about your attitudes and approach towards financial freedom and what is inside your wallet will always be more important that what you use as your wallet.

I never buy a wallet that costs more than the money I have inside it. :-)

Be well and prosper.