How to Use a Credit Card to Finally Stay on Budget

use a credit card to budget

As someone who’s self-employed, I’ve found it very difficult to stick to a regular budget while having inconsistent income. My solution? Use a personal credit card for all household bills and daily purchases, then pay the balance off every week.

After many years of trying (and failing) to stick to a budget plan, this strategy of using credit cards has finally helped my husband and I stick to a budget. There are actually quite a few advantages to this method, such as:

  • Not having to balance multiple checking accounts
  • Easily tracking your spending versus budgeting every single penny
  • Simplified bookkeeping strategy for couples
  • More cash flow in your bank account
  • Less confusion about expenses or purchase disputes
  • Getting credit card rewards for everyday purchases

If you’ve been struggling to stick to a good spending plan, here’s how to use a credit card to create a budget that actually works.

Start paying all personal bills with one credit card

Choose one personal credit card that both you and your partner can easily access and ensure that it offers cash back rewards on purchases you make the most.

Make a list of all your household bills, including utilities, internet, and cell phone, and log into those accounts online to update the payment method. This will help alleviate some cash flow in your bank account while still being able to manage your finances all in one place.

Use the same credit card for daily purchases

Using the same credit card account, start swiping it for all your daily purchases. In addition to your household bills, use this card for groceries, gas, coffee shops, and other places you frequent.

Nearly every purchase you make should be charged to this new credit card. Consolidating all of your bills and purchases onto one card will help you track every expense you and your partner make.

When two people are trying to manage one bank account, it makes it much more difficult since you can’t always communicate in real time before making a purchase. However, with a credit card you’re able to review the transactions every week.

If something doesn’t look quite right after the purchase is complete, you can request a refund or dispute a charge if needed, without ever losing money in your bank account.

Review the transactions weekly

As someone with an irregular income, I find it much simpler to review my credit card transactions on a weekly basis.

I do this every Monday morning before I start my regular work week, then schedule that week’s payment to cover all of last week’s expenses. This helps keep my credit card balance low and manageable, so I don’t risk going into debt.

You may find it more beneficial to make a payment every other week. Do what works best for you and your finances, but it’s still advisable to review the purchases each week so you don’t miss any disputes or double charges.

Set a regular spending limit

Much like a traditional budget, the key to staying in control of credit card spending is setting a monthly spending limit. If you’re not used to budgeting at all, it may take a few months to get into a good habit of setting a spending limit and sticking to it.

Depending on the financial software you use to manage your budget, you can set alerts to warn you if you’re approaching your spending limit. If you prefer getting results in real-time, use a money management app so you can pull up your budget information on the go.

Pay off the balance frequently

It’s key to check in with your budget on a weekly basis so you can adjust your spending throughout the month. Otherwise, you risk overspending and racking up credit card debt, which can be a dangerous thing for your finances.

As you’re checking in with your budget and verifying all expenses on a weekly basis, go ahead and schedule a payment to pay off the balance. Simply add up all of the purchases you’ve made since the last statement and make a payment from your checking account.

Cash in rewards or points earned

Obviously, one of the main benefits to using a credit card to finally stay on budget is that you’ll receive rewards and cashback for all your purchases.

You’d be surprised how much you spend every week, and those rewards can add up pretty quickly. Depending on what type of credit card you use, you could earn several hundreds of dollars in cash back or statement credits for things you purchase every day.

In fact, my husband and I earn about $25 back every single month for charges made to our credit card for household bills, groceries, and other lifestyle needs. That adds up to between $300 cash back per year for us.

If you’re in a place where you are financially ready to use credit cards, using one could finally help you stay on budget. When done right, a credit card can be a smart financial tool for budgeting.

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