Studies show that people spend as much as 100% more when they do not use real money. However, the new Apple Pay smart phone payment system has great promise. You can leave your wallet, credit card, and debit card at home.
Credit and debit cards made spending easier. Now, Apple hopes its new Apple Pay system will be another leap forward in making spending even easier.
Research shows that people who use credit cards tend to give bigger tips at restaurants. They also tend to spend more at department stores. This is what is called the “credit card premium.” People tend to pay more for something simply because they are using a credit card rather than cash. Research also shows the same is true when using debit cards, and another study even shows that turnpike toll booths using electronic collection increased their toll receipts by up to 40%.
If the Apple Pay pay-by-phone system turns out to be as convenient as Apple hopes, the Apple Pay premium may even be higher than the credit- and debit-card premium.
What does this mean for you? Be intentional with your spending and savings. When consumers don’t use cash and when payment is simple, people tend to spend more, depositing less toward retirement and incurring more personal debt.
Be intentional with your savings, investing, charitable giving, and spending. Pay yourself first! Setup direct payroll deposits into your 401(k) plan or IRA account to prepare for your retirement. Don’t wait to see what is left at the end of each paycheck. Some technological advances come at a price, particularly if you do not save and spend intentionally.
For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.