Don’t use the credit card. Stay away from the debt. You might have received such pieces of advice from the financial experts or investment planner. Well, I would say it’s 99% correct. It always prudent to stay away from the debt product like a credit card or loans. but, Do you know you can use the credit card as a money management tool? Yes, you read it right. Your this piece of plastic can be a great money management tool if you use it intelligently. How? Let’s have a look.
Track Your Expenses, then set the regular budget
Before preparing your monthly budget you need to know how much you’re spending and where your money is going. This is easy to track. There are many budgeting software’s are available online. Just download those software’s and track your money. Just classify transactions to identify the transaction’s category wise.
Even many banks allow you to organize your transactions category wise, such as restaurants, clothing or groceries for your credit card. For a quick snapshot, my favorite practice is to go throughout a credit card summary.
Once you figure out your monthly expenses, now you can prepare your budget.
Review Your transactions
For money management, it’s important to review your monthly or weekly budget to make sure you are spending within your set limit. Check credit card summary to give you a view of your expenses. Review your transactions. Figure out where you are spending more and try to control that expenses if possible.
Set A Monthly Spending Limit For Your Card
Set a monthly limit for your credit card. This is an easier way to stay within budget. For example, if you’ve prepared a monthly budget of $1000 set the same limit for your credit card. Once it will get done check, your overall spending at least once a week to make sure you’re on a track. So if your monthly limit is $1000, and you hit $800 on 20th of the month, you need to control your remaining expenses within $200 or less. You can adjust your monthly limit on a time to time basis when you have irregular expenses like an insurance premium, hospitality or vacation.
At the end you might still ask but why a Credit Card (a debt product) For Money Management? So many reasons for using a credit card for money management such as responsible credit card use can improve your credit score. Apart from it, many banks offer rewards on a credit card buy so you can earn a decent cash back on your every transaction. That’s mean you save more money. Even you can use your credit card to buy a business asset which can earn you more. Just keep remembering to clear your payment before the due date to avoid any penalty.