Why your debit card may be the secret to building good money habits

Many people view their checking account as their primary tool for everyday spending and bill pay. Great. But few realize the piece of plastic that comes with your checking account can help you build solid spending habits. Yep, we’re talking about the power of your debit card.

“The main advantage of using a debit card over a credit card is you’re spending money you actually have,” says Josh Hastings, founder of personal finance blog Money Life Wax.

“When my wife and I discuss our budget, we base it on the money we have, not the money credit might allow us to have,” he says.

To build good money habits with a debit card—and even spend less money with a debit card—try these three tips:

1. Monitor your spending

Budget boundaries are huge if you want to spend less money with a debit card.

“Tracking your spending is one of the quickest ways to develop good financial discipline,” Hastings says. If you’re spending with debit, plan to regularly check in on your account balance and transaction history by logging into online or mobile banking.

You can also try a financial app to build good money habits with a debit card, says Matthew LaMont, a financial advisor with Periscope Financial in Roseville, California.

“Most banking apps offer spending analytics to help categorize your transactions,” he says. Budgeting apps that sync with your checking account may also have this feature.

“Knowing where your money is going is the first step to being able to redirect it to where you want it to go,” LaMont adds.

2. Remove the temptation to overspend

Since you’re not handing over physical cash to make your purchases, Hastings says debit cards can lead to an “out of sight, out of mind” mentality if you’re not careful.

To ditch overspending and to build good money habits with a debit card, consider setting up email or text alerts for new debit card purchases. This can encourage you to get in the habit of viewing your debit card like cash, and you may be tempted to spend less money with a debit card when there’s a regular reminder of what’s coming out of your account.

To build good money habits with a debit card, Hastings also recommends avoiding impulse buys. Try imposing a 48-hour debit rule to think about a purchase before committing your funds, scheduling no-spend days on your calendar or simply leaving your debit card at home if you know you won’t need it.

Spending temptation can also hit when you’re shopping online. Ever load up your online shopping cart with more items than you really need? Applying the 48-hour debit rule can help you decide if those items are must-haves, and if it’s a no-spend kind of day, you’ll need to give your online purchases some extra thought before completing that order.

3. Let debit and savings work together

If you’re striving to build good money habits with a debit card, consider linking your checking account to your savings account. This can make it simple to schedule transfers if you have extra room in your budget for savings. Bonus: Scheduling automatic transfers from checking to savings can reduce the temptation to spend funds you have earmarked for other goals (starting an emergency fund or saving up for a big vacay, maybe?).

Linking your accounts could be problematic, however, if you get into a routine of moving money from savings to checking to cover unnecessary or out-of-budget debit purchases.

“Savings is designed for just that—saving,” Hastings says. “Transferring savings to your checking when you’re running low doesn’t promote positive financial habits. It actually encourages bad ones,” he adds.

Spend less money with a debit card

A debit card can be a useful tool for managing your finances. But to build good money habits with a debit card, you’ll need to use it wisely. Having the right mindset and understanding why you’re spending with debit, rather than cash or credit, is helpful for keeping your spending in check. Remember that when you spend less money with a debit card you may have money left over in your budget to save and pursue your financial goals.