Today's Client... and their idea

@AidaLily (1450)
United States
February 22, 2013 10:41am CST
As I have stated before on mylot, I help people with their budgets and some other financial decisions as well. If clients are married or committed to each other and see me together then they are one client. Today, I had a client referred to me by another client of mine. We met at the library and started discussing their finances which included the usual questions - 'Where do you want to be five years from now?' etc. They had prepaid for three hours just in case things took longer and when it only took two hours I tried to pay them back the extra $10 but they just said consider it a prepaid hour later on. I was happy they would be coming back but that isn't what I found the most interesting in our discussion. No. What I found most interesting was a prepaid card system they asked me about trying out. I was upfront and honest that I wasn't sure how it would work but gave them the best advice I could give based on what they were talking about. They felt that they shouldn't have much money in their bank account at all. Not because they don't trust their bank, but because they don't trust themselves with their debit cards. It is a common problem I see with most of my clients. What they wanted to do was to obtain a bunch of prepaid cards with the credit logos on them like Visa, and every pay check put either the amount needed (and sometimes extra) onto a low-fee or no-fee prepaid card. They would keep a transaction booklet of which card was to pay for each bill even so much as labeling them with a dot that had a letter and number on it. This way if they needed to go shopping for food they had the 'Food Card', for the electric bill they had the 'Electric Bill Card', etc. The client believes they will be able to save money that way since they would have literal limits on anything they could buy based on the card balance. I told them that that the system could in fact work BUT they'd still have to exercise a decent amount of control. After all, while they may not use their debit card, they may decide they can use the 'Food' card to buy something they may want. If they were serious about wanting to do this, then I told them I would look into prepaid cards and email them some choices and they could check out a prepaid card selection in stores like Walmart and such. I told them to start small and just put the amount we budgeted for food and their water bill onto a card of their choosing from either the email or their own research into prepaid cards at stores. Since they offered to allow me to keep the money as prepayment for next session, I told them we would have a session in a month to see how it worked. I would like to know what my fellow mylotters think of my client's idea. Do you think it would work? Would you be willing to try something like that if you have a spending problem?
5 responses
• United States
22 Feb 13
Have you considered suggesting the envelope system? On the front, they would write the name of the bill, the amount of it, and the date that it's due. They'd have the additional expense of purchasing stamps and money orders, but it could teach them discipline. And it might be better than a prepaid card because it would prevent them from using the money for food to buy shoes.
@AidaLily (1450)
• United States
23 Feb 13
I had suggested to them to make lists before shopping and to possibly prepay the bills rather than using prepaid cards. For a couple of my bills such as my current internet, phone, and cable provider, I split the payments between paychecks. I have a couple other clients who have done well with that as well. They were just really gung-ho about this prepaid card system the moment we figured out their budget and kept trying to explain how great of an idea it was. However, I think because they were having a problem with their debit card spending this isn't going to help much. They say it will help with their restraint to only have so much on one card so then they wont be able to go over their limits. I told them to start small and see if that works. When I meet them again I will suggest the envelope system. Hopefully, they wont stop spending the money in the same way just saying they will take ten dollars from Bill A and put it back later. Impulse shopping is a big problem people seem to have.
• United States
23 Feb 13
I started back with making a shopping list. I was putting it on my phone, but the type is so small that I was constantly putting on my glasses, or criss-crossing the store and still forgetting things! Last week, I wrote my grocery list on a piece of scrap paper, ended up crossing off a couple of things while adding others and only spent $85 of my $100 budget. It was also a lot less stressful for me. My boyfriend is the one that has the impulse problem-we last went to the store to by some Mio and came home $120 over budget, but we did have a lot of fun, and he was able to get some foods he liked. I've tried splitting our bills, but if I don't hide the money some way, my boyfriend spends it. I'd love to try the envelope system, but I don't see him having that much restraint. But since he receives his VA disability on the first, that money is for rent (apartment and storage) and the payment we make each month on a large past due bill.
@AidaLily (1450)
• United States
23 Feb 13
A grocery list has helped me to get in and out of the store faster and usually within my budget though I will admit to splurging on some foods I like every now and then if I can. One of my friends is an impulse "sale" shopper. Meaning if anything looks like a good buy or sale, then she has to buy it (as long as it is something she uses) and ends up going over budget all the time. She jokes about wishing she had a shock bracelet that would buzz before she goes over her budget. I told her if she can figure out a way for it to work and be secure she should invent it. An old client I used to have before they ended up moving out of country to be with their spouse who was originally from Japan used to bank at a place here that has three accounts such as Spend, Reserve, and Growth. The Growth account would allow for up to six transfers a month and wasn't counted in the money left in the main spending account so sometimes she forgot about it. That might help if your bank or credit union has something like that.
@Raine38 (9195)
• United States
22 Feb 13
Uhm, I'm not really sure. So what if they still did not exercise control and max out the fund that they put in their prepaid card? What's going to stop them from putting more amount in there? It's the same as using a debit card or credit card, it's success-or failure-depends on the control and budgeting skills of the user. Besides, prepaid cards often charge high monthly fees whether you use the card or not. So let's say you purchase the prepaid card for $3.00 That's $3 upfront, no funds in the card yet. THen you load it up with $50. By months' end, you could be charged with $9.00 (some prepaid card that I tried). The following month, it will charge you again with $9. Ridiculous? For me it is. I can spend that fee to something far more important. I decided to just consume all the funds I put in my prepaid card. Then I got this credit card with waived monthly fees. I just watch what and how much I spend and make sure I pay it way before its due date as I don't want to pay anymore additional charges. Plus, prepaid cards do not have the bonuses being offered by most credit card companies. Mine accumulates "miles" that I can use for traveling. My husband was able to use his points to get an upgrade in his airplane seat, and I was able to use mine to pay for my check in luggage.
@AidaLily (1450)
• United States
23 Feb 13
The exercising control was my point to them when I spoke with them, but they really want to try this anyway. There are prepaid cards that charge no monthly fees in which case they would literally have to find all of those or the few that charge 1-3 a month for use. I mean I have met a variety of people since I offered budget services and the like to people with low income and such while I am working on my degree. I suggest to them the best course of action and as with any such business like that (even medical advice from a doctor) people choose whether to follow it or not. They were pretty much sold on doing that after we worked out the budget even when I expressed some skepticism about the idea. They really wanted to try and so that is why I suggested a small start to see if it actually works. I do have clients with spending issues when it comes to their debit card but they seem to do better with leaving the card at home after taking out a set amount of cash. I've never heard of someone doing a full prepaid card system. I refuse to do credit cards myself and explain to my clients everything they are truly getting into with them as most people don't know completely. I truly believe when it comes to things minus obviously school or a house mortgage, they should be purchased in cash. Too many people get into so much trouble when it comes to credit in my opinion.
• United States
22 Feb 13
I like to shop for my Christmas gifts all year round to save me money in the holiday season. that would not work for me because all I would do is like you said use the food card and replace the money later. That system is not going to work for me as long as those cards have fees on them also. I pay no banking fees with my bank. so,I would never put my money on a card that would cost me to use it. so,you have a lot to work out with them. right now I am using a cash box to save my money.
@AidaLily (1450)
• United States
22 Feb 13
There are prepaid cards that have no fees. I've gotten a few for the holiday season before. However, yeah, just as you have said you would and I think most people would use the other card and say 'Oh I will just replace it later'. I will be working with them on it which is why I told them to start small. If they use the "Food" card for anything but Food, then I am going to help them find another way. As with any business like this, you can recommend and suggest to the client a course of action and the client chooses whether or not they follow it. I want to mention that it is great you shop for the gifts all year round. One client of mine actually does her Christmas shopping after certain seasons because of how the out of season item goes on sale since they need to sale off inventory. I always recommend that people do not do any Christmas shopping around Christmas. As a former retail worker and more, I know for a fact the prices rise up a considerable amount before Black Friday so your 'sale' price is now up to $40 or more above the original price. It is much better to buy it earlier in the year when it is not needed or a hot priced item so the prices are lower. I've purchased every bathing suit I've had for example in the middle of fall or beginning of winter when the prices have dropped on them considerably.
@natliegleb (5184)
• India
23 Feb 13
for sure it sounds like a creative and wonderful idea to go with and also the way to reduce costs easily
@kprofgames (3104)
• United States
23 Feb 13
Sounds like a juggling act to me when you are involving so many cards. Sounds like they are living in a plastic world. Never really appreciating their money because to them it's a swipe of a card. It is tempting with a debit card....BECAUSE IT'S TOO EASY.....I would be afraid that with the prepaid cards they would be forever stuck in the plastic world over how to handle their money.