New Ways to Spend, Save and Borrow

New Ways to Spend,Save and Borrow?

New technologies are transforming the way we spend,save and borrow. We cannot always predict the social and cultural consequences that might arise from these technological changes. 

The way people use their money is also changing.From contactless payments to moving money around online, to using mobile phones to make payments,new digital technologies are being developed all over the world. Some of these can have unexpected social consequences.Others can transform lives by opening up access to finance for people who were previously outside the banking sector.

The ethics of borrowing and lending money is still questioned. With credit so easy to get,why would anyone want to save money and buy with cash. You pull out the plastic and pay it back with payments over who knows for how long,that is if you can afford this transaction.But even when borrowing is cheap,perhaps, not easy, it becomes good management to become financially independent.Financial independence is not the same as being rich, but having savings is what it takes to becoming rich.If you want to have a good,relatively stress free financial life, you need to save for annual expenses.But, it can be dangerous to put expenses on credit without paying them off.Saving for them in advance is peace of mind,as well as money saving.

Card Fraud

Among the perils of card transactions is Card Fraud. Methods of credit card fraud include when card details are used to make purchases that don't require physical presence,such as online,through the post or over the telephone or using a lost or stolen card to make a purchase or to withdraw cash.  There are many precautions, but one that has come to light recently is the disposable virtual card in a effort to combat online card fraud. "Revolut" customers have (among other things been able to take currency abroad without incurring charges) are now also able whenever they pay for goods or services online to create a new disposable virtual card within seconds. The account stays the same,so the money is coming out of the same place,but the card details you input will automatically scramble into a new combination after every transaction, preventing anybody from cloning and reusing your card.It also has the ability to freeze and unfreeze physical cards and disabling contactless payments. 

Being organised

Being organised is by no means going to make you happy,all by itself, but it surely can help. There is so much you have no control over your future,so putting aside some savings to spend later when you need it,makes sense.

There are a variety of payment options available. Payment by cash, payment by EFTPOS, payment online,payment by cheque,payment by credit,payment by lay-by, gift cards.

Payment methods

The latest attraction is payment for a holiday by paying a minimum deposit of £50.00 and paying the balance before the holiday date in equal instalments. It is also called lay-by, which is paying off an item over a certain period of time. The shop will store or keep the item until it is paid off.

There is the Go/Henry Debit card, a family banking tool designed for young people. It is a prepaid Pocket Money Card and App. It is an online account for you and a linked account for each of your children.They are all managed through mobile and web application. Each child gets their Go/Henry, or Go/George Prepaid Debit Card,with parental control. Only the money on the card can be spent.There is no danger of debt or overdraft.Your children learn about money by seeing how earning,saving and spending works for them. It is controlled by rules and limits you set,accessed by a security pin number, easily blocked and unblocked by you or your child, without a phone call.

In some states in South and West Australia,there is a scheme that controls how social security payments can be spent. Under the plan 20% of benefits are paid in cash and the rest is locked into a "indue Card" - a debit card that could not be used to buy alcohol,drugs or gamble.

Pain free saving
Apartment Therapy came up with a pain free saving plan which sees participants put aside a small sum each day. The concept is that every Sunday you put aside £1,followed by £2 on Monday,£3 on Tuesday, £4 on Wednesday and so on. On Saturday you would put £7 and the process repeats and you will put aside £1 on Sunday as the new week begins. The last daily amount £7 is around the cost of two coffees,so it is not too overwhelming to factor into the budget. If you stick to the daily savings routine you will have put aside £28 a week,which works out as £1456 by the end of the year. It is up to you whether you throw coins in a jar everyday to use up small change or transfer the cash into a Savings Account each week. 

The ethics of borrowing and lending

Questions about the ethics of money lending date back to the beginning of the recorded human history.Money lenders have always been accused of exploiting the poor by charging too much interest for loans.

"Neither a borrower or a lender be"Polonius advises in Hamlet, for loan often loses both itself and friend, said Shakespeare.

The Archbishop of Canterbury,has recently declared war on "pay day loan" providers. But how do other faiths view this issue.

With the rise of Islamic finance, Sharia law is typically interpreted to include a ban on charging interest or "riba". The rent or utility charge you pay in order to live in the house, is the same as interest in a "riba" based loan. HSBC Amanah, Banksilami and Abu Dhabi Islamic Bank among others issued their credit cards which is based on Sharia contract. It is offered to Muslims and non Muslims.It is completely free of any "riba" or "gharar," which means no extra amount may be charged in transactions dealing with silver,gold or money.

The Future of Money

Bitcoin or digital blockchain is not the future of money. Bitcoin may resemble physical cash But where physical cash is the liability of a Central Bank or government controlling its value,Bitcoin is the liability of nobody.

Cash will and should perhaps,dwindle as a store of value.

The future belongs not to plastic cards but the way it goes, it may be mobile phone apps.

Victor Cherubim