Considering that 1 in 4 Canadians are vulnerable to E-Wallet overspending, what does this reveal about trends in digital spending habits. Are people becoming too detached from our finances due to technology?
The world is increasingly turning towards digital payments, and Canada is no exception. Digital wallet services have surged in popularity over recent years. A 2019 survey revealed that 29 percent of Internet users in Canada have used digital wallet services to pay for online purchases. This figure represents a significant leap from the 13 percent who stated they’d used such services back in 2016.
Despite this convenience, there’s a dark side. An apt mirror reflecting today’s financial reality came from another survey. Data showed that around 23.3 percent of the sample agreed that e-wallets have a potentially reckless influence on spending, effectively meaning that one in four Canadians could fall prey to unintentional overspending.
Jason Adler, a Software Engineer at the company Repocket emphasizes the importance of understanding the implications of this technology, telling Digital Journal: “Digital wallets undoubtedly provide convenience,” he explains. “However, their danger lies in the very same convenience. It’s easy to lose track of your spending when you’re just a click away from making a purchase.”
The issue here is transparency – or lack thereof. Since the transaction process is entirely digitized, consumers can easily lose track of their spending. Traditional methods of payment like cash or debit cards provide a physical reminder of money spent – a feature missing with digital wallets.
Key dangers include:
- Impulse Purchasing: Digital wallets facilitate instant purchasing, which can lead to reckless buying decisions based on impulse rather than necessity.
- Overspending: With no physical money changing hands, the sense of spending can be diluted, leading to potential overspending.
- Debt Accumulation: Continuous overspending may result in high credit card bills or accruing loans, which further leads to debt accumulation.
- Financial Instability: High levels of debt and low savings due to overspending can lead to financial instability in the long run.
Adler offers some practical tips for controlling digital wallet spending.
- Budgeting: Create and stick to a monthly budget, making sure to include digital wallet spending in the mix.
- Monitoring: Regularly track digital wallet expenses. Many apps offer in-built spending trackers.
- Limiting: Set a monthly limit on spending through digital wallets.
- Reflecting: Assess whether a purchase is truly necessary before making it.
- Informed Decision Making: Research and compare prices before purchasing a product or service.
Based on the above, financial literacy is an important subject and left unchecked, this could enfold into a significant economic concern.
