Whether you get paper or electronic statements, they normally come once a month. If you have multiple credit cards, be sure to check the statements for each one. If you get paper statements, make sure you shred them when you’re done to avoid identity theft. Checking your statements closely is also an important way to catch any fraudulent purchases.
Some budgeting and money management apps give you a full readout of all your accounts. This makes checking up on your finances even easier. If you often forget to do this, schedule the time and set a reminder on your phone or computer. Make it a regular thing so you get into the habit of checking your finances.
You can get rid of your receipts as soon as you check them against your monthly statement and have verified all your purchases. If there are any suspicious charges and you can’t verify them, report it to your bank right away. As long as you report fraud early enough, you can avoid paying for the purchases.
This is also helpful if you have a rewards or cashback card. By putting all your purchases on your card, you’ll build points that you can cash in later on. Use autopay to pay all of your bills with your credit card. In addition to being easier to track, this will help ensure your bills always get paid on time. If you already carry a lot of credit card debt or have trouble staying within your budget, then using your card more often might not be the best idea. In this case, use cash more often to keep your purchases under control. [5] X Research source
Most banks also have smartphone apps you can download. With an app, you can check your account on the go at any time. Keep your password and login information for your online baking accounts secret. If anyone accesses your accounts, they could take your money.
You can personalize these alerts if you want to. For example, you can set it to alert you only for charges over $100 if you want to cut down on large purchases. Purchase alerts are also a good way to catch any fraudulent purchases quickly.
Some popular budgeting apps are Mint, Personal Capital, You Need a Budget, and Pocket Guard. Some of these are free and some have a small fee for premium features. More advanced apps can link with your other accounts and give you a readout of your income, cashflow, and investments, in addition to your spending. These are great tools for tracking your complete financial health.
The most popular rewards app is AwardWallet. This tracks all of your cashback points, rewards, and frequent flyer miles so you’ll always know where you stand. Not all credit cards participate in AwardWallet, so confirm that yours does before using it.
Use a month where your spending was pretty average. If you made an unusually large purchase the previous month or spent less than normal, then it’s not a good month for comparison. Choose a different month that’s more normal.
If you have a particular hobby, it might make sense to give it its own category. For instance, gaming is technically entertainment, but if you spend a lot on it, then a specific gaming category gives you a clear idea of what it’s costing you. Your statement or spending apps might break down your purchases for you already. Mint and Personal Capital, for example, automatically break down your spending into categories. Using one of these apps makes breaking down your budget much easier. Remember to double check the way your apps categorize your spending. Some categories might be incorrect, and you can re-classify them into the right one to manage your budget.
On the other hand, discretionary or unnecessary expenses are entertainment, trips to the bar or coffee shop, clothing purchases above what you need, designer items, and everything else that you can live without. If you aren’t sure how to categorize an expense, really ask yourself if you can live without it. If you can skip it without major hardship, then it’s not a necessary purchase.
If you see that your daily coffee trips are starting to add up, for instance, you could make coffee at home instead. However, avoid setting rules that are too strict, like only eating out once a month. That could cause you to end up overcompensating and spending more. Some of your necessary expenses could be scaled back too. For instance, if you tend to spend a lot of money on clothes, you might actually save by using a subscription box service. You might also find that your budget is in pretty good shape after you break everything down. In this case, congratulations!
If you manage your budget and only buy things you can afford, then paying your card off shouldn’t be a problem most of the time. This isn’t always possible. You might have to make an unusually large purchase and pay it off over time, and this is okay. Just make sure you pay what you can consistently to get rid of that debt quickly.
For example, if you have a $2,000 balance and your minimum payment is only $25, it’ll take a long time to pay that debt off. In the meantime, the interest payments will keep growing. Try to pay more like $100 each month if you can so the debt decreases over time. If you have multiple credit cards, it’s best to focus on paying the ones with the highest interest rates first. This way, you’ll gradually pay down your debt without getting deeper in the hole with interest.
Some banks let you set up automatic transfers on the day that a bill is due. You could set this up for your credit card account so you don’t miss any payments. You could also set reminders on your phone to go off when your bills are due. This is a simple way to stay organized.
For example, you may have made a $500 purchase. However, if your card had a 15% interest rate and you only make minimum payments, you could end up paying closer to $600 by the time the card is paid off. Paying attention to the interest is very important for avoiding credit card debt. Interest rates are commonly 15-20%, so you’ll end up in a lot of debt if you make big purchases without paying them off.
For example, if your card has a $10,000 limit, but you only need $2,000 per month for your normal expenses, then ask to have your limit lowered to $4,000. This covers your expenses and leaves some extra room for unexpected purchases, but there’s a lot of risk of going very far over budget. This is only recommended as a last resort if you have a lot of trouble staying within your budget. Lowering your credit limit will also lower your credit score, since you’ll be using a larger percentage of your available credit each month. Try other budgeting advice before taking this step to maintain your credit score. You could always ask to have your limit raised again if you get better at budgeting in the future.
