Your credit card can be your best friend or your worst enemy. The choice is yours. One way to keep your card in the “very best friend” category is to establish some discipline around your spending patterns and use your credit card with confidence throughout the month, committing in advance to pay it off in full – not just the minimum repayment – the whole amount.
- Free Family Budget Planner for Excel
- How to Establish a Household Budget
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A budget is a simple tool but it’s absolutely essential for your family’s ongoing financial stability. You have to have a budget established to make this plan work so make sure you do that before moving on.
The next step is to make ALL of your monthly purchases with just one of your credit cards. Doing this will provide a detailed breakdown of ALL your spending on your next monthly statement. You can simply cross-check each of your purchases at the end of each month with your pre-set budget from that month. You can immediately spot areas where you have overspent in your pre-budgeted categories. For this method to work, however, you can’t use your card carelessly to purchase items you haven’t allocated to your budget. Every expenditure must be accounted and planned for, including the small change leftover for incidentals.
The other really interesting thing that should happen is that, surprisingly, using this method most people will spend less money. How does this happen? For one, many times store merchants will exact a minimum charge amount of at least $10 to use with a credit card. Most people using this method find it inconvenient to use their credit card for those small incidental purchases anyway. Often times, they decide not to purchase these items because of the hassle of charging them on a card. When added up over a month, these little “incidentals” could come to as much as $50, $70 or $100. Typical items include magazines, pens, snack items and a hundred other minor impulse buys that individually seem quite harmless, but when examined further, many times the total adds up to be much more than just “incidental”. If you give this method a fair trial, from three to six months, you will be amazed at the things you thought you absolutely had to have, that you simply and easily give up on before buying with your card. “Not that important – it’s too much of a hassle.”
Now, the final and absolutely essential step for success with this method, is to pay your credit card account for the month in full. If you pay by the due date, you incur no penalties, accumulate no debt and elevate your credit card to the status it deserves – your friend.