Credit cards have become a part of everyone’s life. Since the launch of the first visa card in India in the year 1981, people are getting used to the ease of a single swipe and enjoying the unlimited benefits of doing a cashless transaction. If used wisely, these can solve a number of financial issues which otherwise may seem difficult. Hence a sound knowledge of credit card etiquette is immensely useful.
Some of the etiquette to be followed are outlined below:
Planning: One should be aware of the one’s fixed cash inflow and cash outflow. In a typically ideal situation, if the total earning is 45,000 and the fixed expenses (which covers the basic needs) is 25,000 one should plan the miscellaneous expenses in such a way that it should not increase a predefined fixed percentage of the remaining amount.
Miscellaneous Expense <= X% * (Fixed Earning – Fixed Expense)
Savings = Fixed Earning – (Fixed Expense + Miscellaneous Expense)
Estimating: In many situations we tend to increase the budget and spend without thinking of the consequences. It is not a matter to worry if you have a this card, as it resolves the immediate financial need. But you need to be careful enough so that you can repay the amount in a couple of months, that you have used. Making a list of all the expenses and grouping them into priority levels helps.
Tools: A simple excel sheet can do wonders in planning your expense. Maintaining a daily expense sheet controls your spending habit. There are various online expense management trackers and managers that can help you manage the money effectively.
Self Discipline: This is the most important factor to be considered. This is required to control your desires and hence the expense list. If you are self disciplined, you will not get easily seduced with the innumerable exciting offers.
With the above tips one should be able to live a financially well planned life. These can save one from getting into a deep financial whole and these tips can save an individual from falling into the lures of these cards. Improper usage may lead to a financially unstable situation that one may be unable to recover from. Having a well planned financial budget and schedule for each month not only organizes your financial life but inculcates a habit of being well-organized in all spheres. These cards have become a part of everyone’s life but should be used carefully and diligently.