How Much Should You Keep in Your Mobile Wallet?

Are mobile wallets safe? How do mobile wallets work? Here's how you can use mobile wallets to better manage your money.

Mobile wallets are a convenient alternative to carrying cash, and many would consider them to be safer. But before you keep a few thousand dollars in one, just remember mobile wallets are not 100 per cent secure. On top of that, there’s the risk of spending more just because you have more. Here’s how to keep your digital funds managed:

Why Limit the Amount of Funds You Keep in a Mobile Wallet?

There are three main reasons to cap the funds in a mobile wallet.

The first reason is the risk of identity theft. While most mobile wallets are secure, it’s not impossible that a hacker may find a way in it. Remember that mobile wallets are fairly new - many of them do not have the same contingencies as credit cards.

If someone were to steal your credit card, for example, you could dispute the charges with the bank, and might only be partially liable. If someone gains access to your digital wallet, there may be no recourse when the thief spends every last dollar.

Second, you have to consider that most mobile wallets are run by private companies. What happens if that company were to go out of business suddenly? Even if everyone gets refunded (in theory), you have no way of knowing whether such a process will be accurate and timely. In a worst case scenario, your mobile wallet might be wiped out once the company managing it closes.

Third, mobile can sometimes fail. If the system goes down for a few days, for example, your money may not be accessible during that time. You want to make sure this doesn’t affect a large part of your monthly income.

What is the Right Amount to Keep in a Mobile Wallet?

There are two principles to follow, when keeping money in a mobile wallet.

First, always use a budget-based allocation. In other words, you shouldn’t arbitrarily decide how much to put in the wallet. You should decide what the wallet will be used to pay for, and budget a fixed amount for the expense. For example:

Say you have a budget of S$150 for groceries, every month. If you decide to use your mobile wallet for grocery shopping, it should be capped at S$150. If the cost would be higher, it’s time to start taking things out of your grocery cart. In this way, the mobile wallet helps to contain your spending.

Second, always reset your mobile wallet at the end of the month. If you put S$150 in it, and you only spent S$140, the remaining S$10 should go into your savings account - either that, or only top up S$140. The amount in your mobile wallet should be what you budgeted for, and nothing else.

Check the Terms and Conditions First Before Deciding the Maximum Amount to Store

Before you decide on the maximum amount to store in your digital wallet, always check the terms and conditions, first. You want to check for how much the company is liable for in the event of it closing down.

Once you know the amount, use that as a gauge as to how much you should store. You should also note the policy for refunds (if any) in the case of identity theft.

If there are no protections against these, then it’s advisable not to put more than S$150 in your mobile wallet, even if the budgeted amount is higher. 

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