Author Bio: Alice Stevens loves learning languages and traveling. She currently manages debt and tax relief, life and health insurance, and car warranty content for BestCompany.com
Sticking to a monthly budget can be a tricky habit to start. It takes a lot of self-control and accountability. Keeping track of funds on your debit card or in your bank account can be an easier task because the funds are limited and there are consequences for overdrawing on your account.
These consequences don’t exist for credit cards, so it can be more difficult to control your credit card spending.
Many credit card companies incentivize card use through points systems and cash-back offers; however, these incentives do not outweigh the costs of high-interest credit card debt.
Credit card companies also usually allow card holders to only pay a certain amount of the balance each month. If you’re only paying the minimum payment, the balance on your credit card is accruing interest and getting larger every day. Controlling your spending is the best way to prevent ballooning credit card debt.
Here are three things you can do to hold yourself accountable and have better control over your credit card spending:
- Set a monthly limit
- Use your credit card for certain expenses only
- Evaluate your spending weekly
- Avoid making exceptions
Set a Monthly Limit
Most credit cards come with a credit limit. The limit you qualify for usually depends on your credit history and credit score. Whatever your credit limit is, it’s a good idea not to even come close to spending that much on your credit card.
Set a personal limit for yourself for credit card spending. Make it an amount that you can pay in full at the end of each month. Check in every week to see how much you’re actually spending on your credit card, and stop once you hit your limit.
If you’re spending close to your credit limit and are having a hard time controlling your spending, you can ask your bank to lower your credit limit. This can help hold you accountable for your spending and motivate you to moderate your spending habits.
Use Your Credit Card For Certain Expenses Only
Another way to control your credit card spending is to only use it for certain expenses, like gas or groceries. It’s a good idea to use your credit card for regularly occurring expenses instead of infrequent large expenses. If you put too many large expenses on your credit card, you may not be able to pay the balance at the end of the month.
Only using your credit card for specific, regular budget items means that you’ll have fewer charges on your credit card. It can also help make the monthly bill smaller and easier to pay in full each month.
Evaluate Your Spending Weekly
If you’re not already in the habit of creating a monthly budget and evaluating your spending weekly, it’s a good habit to start. It can help you manage your overall spending and track your credit card spending. There are some great budgeting apps that make this easier.
Even though your credit card bill will come at the end of the month, consider all the charges on your card as spent money from your budget. Treating your credit card like cash instead of like a loan will make it easier to pay each monthly balance fully and avoid debt at high interest rates.
Avoid Making Exceptions
To successfully manage spending, it’s important to have strict rules and stick to them. Don’t regularly make exceptions. Consider other payment options before putting the expense on your credit card.
If you do decide to put another kind of expense on your credit card or exceed your personal monthly limit, carefully think through your plan to repay those expenses before swiping your card. You may need to lower your personal credit card spending limit to accommodate for these larger expenses. Only do this in emergency situations.
Good Spending Habits
Planning your spending each month helps you to be financially independent and experience financial freedom. Your credit card spending should be part of your monthly budget.
Tracking your spending, setting personal limits, and only using your credit card for certain purchases will help you build good credit and avoid credit card debt. Make a habit of paying the balance in full each month to avoid debt.
Financial emergencies do come up, and credit cards can be a helpful tool for dealing with these emergencies. However, it’s important that you research and evaluate other options before making an exception to your credit card spending rules. Make adjustments to your credit card rules as necessary to accommodate for these emergency expenses. If you can’t pay the full monthly balance, pay more than the minimum required to reduce your debt.