Budgets are kind of like the new year’s resolution that we believe we can achieve at the beginning of each month, but falter on immediately when we see the amount of bills that needs to be paid. So, we cure our headache with a bit of shopping with our credit cards that adds more to our debt. Credit cards and budgeting can go hand in hand when it comes to cutting down costs. It sounds strange, right? We managed to find 5 tips on how to create a smart budget with your credit card in mind for the festive season and beyond that can help you save in a big way.
It is time to sober up
Which is rather contradictory in a festive season that focuses around losing yourself in a sea of spending. Credit cards are supposed to be a convenient way to have money that will pay off necessities, but don’t be fooled. According to the RBA there are currently 16.3 million credit cards in Australia. Perhaps the reason why we tend to over spend on our credit cards is because we visually cannot see the money we are spending on “small purchase” that eventually add up to large debt. Credit cards are great to track expenses as they come with a paper trail of bank statements that can show you what you spend your money on. To make a credit card budget friendly go through these bank statements to see where you have been spending money that you can save. This way you will know where to cut.
Using last month’s budget to find the loop holes
Using last month’s budget can be a great template to helping you create a budget for this month. Keeping factors such as additional expenses over the festive season will also be beneficial. The key is to be realistic. Create budget limits that see you using your credit card when it’s really needed, instead of whipping it out to sub your budget. A good starting point is to take your average spending in each category and cut it down by 20%. Groceries are usually one of the large expenses. To help you keep to your budget, you can ask your credit issuer to lower your credit limit.
Making use of store credit cards
Making use of store cards such as Coles Rewards Mastercard that reward you every time you shop with points can be useful. You can gain 2 points for every $1 spent, which can come in handy later by offering a discount for your grocery budget. However, you should be aware of fees like annual and service fees that do not have a high interest rate that could eat up through your points and rewards.
Credit cards rewards and points can be used to supplements your budget
Now that the festive season is literally around the corner there are plenty of credit cards that are offering great benefits that you can use to your advantage. More so when it comes to maintaining a lean budget. Get a hold of a credit card through a credit provider that offers you the best value for your needs. If you’re someone who enjoys travelling then the current deal that ANZ has for Frequent Flyer Platinum Card holders of gaining 65,000 Quanta’s Points by spending $2,500 within the first three months will be a welcomed reward for your budget. You can also cash in on the various offers such as, cash back offers, low interest rates, and personal concierge services that can be of great use over the festive.
Make money smart lifestyle adjustments
Your finances should determine your lifestyle and not the other way around because this could lead to an accumulation of debt that will cripple your hard-earned money. Making lifestyle adjustments such as cutting down expenses for things you can make yourself can save you tonnes of money. If you are a coffee lover and spend money on coffee every day you can cut down these expenses by investing in a coffee machine. Make your own lunch when going to work that can save you up to $1,000 per annum. Make your credit card work for you and not against you.