Evaluate your budget and determine which purchases will be charged. Make a Credit Card Plan Establish Spending LimitsĪ portion of your bills will need to be paid in some form of cash. There are a variety of budget templates available online. You may also find that you prefer to use a simple spreadsheet or a paper budget. Honeydue is another budgeting app designed for couples. You can also use an array of online budgeting apps like Mint, PocketGuard or Fudget. There are a number of budgeting methods, and you may need to try a few to discover one that works for you. If it does not and you are using credit cards to cover a budget shortfall, make sure you are only charging the essentials and limit additional card purchases where possible. Ideally, your monthly income should exceed your expenditures. If possible, avoid including bonuses or income that is not guaranteed. In general, it is best to underestimate variable income. If you are paid on commission, work freelance or have other variable income, you need to determine your average monthly income. For those paid biweekly, multiply your paycheck by 26 and divide that amount by 12 to determine your monthly income. If you are paid monthly, this calculation will be straightforward. You can check out our credit card payoff calculator to compare various scenarios that can help you reach your goals. If you pay $10 over your monthly minimum payment on a credit card debt of $3,000 with a 13.99% APR, you could save almost $345 in interest. If you carry a balance and are trying to pay down debt to reduce interest, make a plan for any additional payments toward your principal.Įven a small amount can have a big financial impact. If you plan ahead for anticipated costs and save a small amount each month, you can avoid incurring unnecessary credit card debt. This strategy is especially important when utilizing a credit card. You can turn variable and periodic costs into a fixed cost by averaging your annual spending. You also need to list periodic costs like car registration, gifts, travel or school expenses. Make sure you also account for any debt payments including student loans and credit cards that have a balance.īased on your tracking, you’ll have a better picture of your spending for variable costs like groceries or utilities. When creating a budget, begin with all your fixed expenses like your mortgage or rent, car payments, daycare costs and insurance, if you pay the same amount each month. You can then set a certain amount every payday to go straight to your vault. SoFi, for example, lets you create “vaults” for various categories of expenses. Some banks make it easier for you to pay yourself first. If a car or home repair occurred unexpectedly, having additional savings can help you cover all or a larger portion of that credit card statement. Paying yourself first means that you contribute a set amount to save for emergencies, college or retirement at the beginning of the pay period.Įmergency savings create an extra buffer when the unexpected happens. This concept pushes back against the idea of saving what’s left over. If you create too many subcategories the tracking process may become tedious. In order to know precisely what you spent in each category, you need to divide out household items, clothing and groceries. Remember that a single trip to Target may cover multiple categories. Be careful not to make it too complicated. The number and specificity of the categories is up to you. Now divide those expenses into key categories. Even if you discuss purchases ahead of time, make sure you have it all recorded in one place. If you share a budget with someone else, make sure you have a shared means of tracking. Don’t rely solely on your credit card statement since some purchases may be cash or electronic transfers. You can collect your receipts, keep a written log or use a spending app. Instead of guessing, keep a record of every expenditure for the month. Variable costs like groceries, gas and eating out can be difficult to accurately estimate. In creating or maintaining a budget, it’s important to track your spending. Track Your Spending Keep a Record of Everything

Setting a household budget