Which form of payment you should use for a purchase depends at least as much on your level of discipline as on your level of incomeand dont forget about security.

Use cash for small purchases, when youre in a hurry, and if you wont mind not having a record of the purchase in a bank or credit card statement. You have to feel comfortable carrying cash, too. Many people wont for safety reasonsflashing a wad of bills in a store could make you a target in the parking lot. On the other hand, many people concerned about identity theft or those recovering from a bankruptcy choose to use cash exclusively.

Use a check if you need a record of the purchase for tax or business purposes, if you dont want to carry around a bunch of cash, or if you dont have a credit card because you dont qualify for one. Of course, youll need to write a check to pay bills by mail, and they can come in handy if your grocery store will let you write a check for more than your purchase in order to get cash without going to the bank or ATM.

Use plastic only if you know yourself well enough to not let the balance build up. Its convenient and fast to use a credit card, especially if you shop by phone, but you need to keep track of what youre charging so it doesnt get out of hand. Its best to pay the full balance every month, for two important reasons: first, in order to build a good credit history (which is invaluable for the remainder of your natural life), and, second, so youre not financing a lifestyle that you cant really afford. If youre concerned about security when shopping online, check to see if your credit card issuer offers virtual credit card numbersthese are card numbers generated at the time youre ready to make an online purchase and are good only for that transaction. If anyone gets hold of that number, it wont be valid for any other purchases.

So, take stock of your habits, your level of discipline, and how you feel about identity theft and online security, and youll be able to make the best choice for you.