By Investopedia.com 11.06.2012
In today's modern age, there are very few things that you cannot do on the Internet. From handling your finances to ordering a pizza, the Internet is a convenient means to taking care of business and socializing with friends. There is, however, a down side to all of this convenience. The Internet makes it very easy to go off track with even a well-structured budget. Here is a look at how the Internet has destroyed my finances in the past and how I've learned from my mistakes.
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The Internet has made it abundantly easy to spend money online. The temptation to spend is significant, with advertisements just about everywhere you look. If you are not extra-vigilant, you can fall prey to temptation and find yourself spending your hard-earned money at a store online. There are many tips you can use to help avoid the temptation to overspend online. Only buy things online that are necessities, and if you feel the need to impulse buy simply stop for a moment and think about how buying unwanted items will affect your long-term financial goals.
Another way the Internet has destroyed my finances in the past is through a phishing scam. While handling a transaction on Paypal, I was logged out of my account and prompted to log back in. Roughly an hour later multiple charges appeared on my Paypal account that I did not make. Because my Paypal account is linked to my debit card, the charges were paid immediately and I had a problem on my hands. My bank and Paypal both initiated their own investigations and a week later my money was refunded. One way to lower the likelihood of falling prey to a scam like this is to attach your credit card to your paypal account rather than your debit card. This way, if you end up being the prey to a scam the scammer will not have access to the funds in your bank account. You will be able to dispute the fraudulent charges with your credit card company much easier than with your bank. Take your time online. Many people fail to realize a scam because the offer or scam seems like a good opportunity or an urgent matter. By taking a few moments to think things through, you can decide if the scam is too good to be true or map the proper steps to research and report the issue.
Online billing can also add financial strain to your budget. Typically, you set up online billing to have funds automatically taken out each month to pay a bill, without much effort on your behalf. It can be a convenient way to take care of your bills. An issue arises when the withdraw date varies from month to month. You always need to make sure you have the total of the bill in your account for when the automatic withdrawal hits, or else your account will be overdrawn and you will be responsible for any fees or interest incurred.
Impulse buying is made even easier with advertisements for products just about everywhere. Also, thanks to social networking sites, just hearing your friends talk about a sale they have encountered or a great piece at a fashion boutique may tempt you to go online and shop.
No Need to Leave Home
When you shop online there is no need to leave home. Simply place your order online, pay for shipping and you can expect your package within a week's time. Some company's offer reasonable shipping, however; others charge astronomical shipping charges. It is easy to bust your budget online when your favorite store is only a few mouse clicks away.
The Bottom Line
While the Internet is a convenient venue for shopping, it may be a little too convenient. Be mindful of your monthly budget when shopping online, and keep track of all automatic billing arrangements you set up. Shopping from the comfort of your home is a great convenience as long as you use it with caution.