A credit card is essential these days. Even if one has the means to pay everything in cash, a credit card is necessary for building up one’s credit score. A high credit score gives one a better chance of being approved for a loan for big-ticket items such as a house or a business franchise.
However, for some, it can be truly tempting to rely on the plastic for everything, especially if one has been granted a high spending limit. If one reaches the maximum limit, they tend to turn to quick loans with high interest rates, which will have its drawbacks. As a result, the debts pile up, and it becomes a never-ending cycle.
When one seems to go in circles with their debts, they have officially fallen into the debt trap. And that will be challenging to get out of. Fortunately, there are sure fire ways to manage your credit card spending so you won’t get ensnared by the debt monster. Read on below for 5 good ones.
- Pay attention to your credit card statements.
It’s easy to ignore credit card statements, whether they’re received via traditional mail or email. Most people focus on what’s left of their spending limit, but not necessarily the items they have spent their money on, and this is a big mistake. Going through your statements and making sure every line item is a legitimate purchase gives you a clearer picture of your spendings. It’s also an effective way of analyzing those purchases that you probably can do without, like a paid subscription to an online graphic design platform that you barely use.
- Use a budgeting app.
Most banks today have an app that allows you to keep track of your spending. Some apps even categorize your expenses, and if something isn’t clear, they’re placed in the miscellaneous category. These apps help you get an idea of where exactly you’re at when it comes to purchases. If you don’t want to use a bank app, you can opt for budget tracking apps for Android or iOS devices which you can link to your accounts. These apps are efficient in noting down your expenses to give you a good picture of your spending.
- Try the envelope method.
Place bills inside envelopes and categorize them according to your expenses. The money should be a good estimate of how much you’d typically spend for that expense monthly. As we’re still in a pandemic, it’s understandable why businesses encourage customers to pay with debit or with credit cards instead of cash. However, most supermarkets and groceries still accept cash, and this is where you can apply the envelope method. Set aside $200 for your monthly groceries. When it’s nearing month-end and you feel your money is running out, then it’s time to get creative. If you have a rewards card, use those points or take advantage of coupons to save money.
- Uninstall shopping apps from your devices.
The notifications about promotions from the online stores you frequently shop from are hard to ignore. Something as simple as a $10 off from a $50 purchase or a free shipping with no minimum purchase can easily urge you to drop everything and reach out for that credit card and make a purchase. It’s like FOMO. A good way to combat this is to remove these apps from your devices so the temptations are gone completely. What you don’t know won’t hurt you, as they say.
- Adopt healthy habits.
You may not be consciously aware of it, but you may have made purchases or used services that you could have easily done without if only you worked on establishing healthy habits. Negative habits may be costing you more than you think. For example, if you notice that every Monday, you tend to spend more on coffee and fast food or sugary snacks, this means that you’re most likely trying to make up for lost sleep. A good way to solve this is to avoid sleeping late on Sundays and instead go to bed early. If you notice that you tend to forego taking public transportation and instead spend a lot of money on rides to get to work or school on time, then most likely it means you need to work on building your time management skills.
Avoiding accumulating debt completely is difficult, but it’s important to do all you can to avoid falling into the debt trap where financial obligations pile on top of another. Follow the suggestions above and they will help you become more money-sensible and steer clear of debts that you’ll struggle to pay.
Sources
Gravler, Elizabeth. “Here are the best expense tracker apps of 2022.” CNBC. https://www.cnbc.com/select/best-expense-tracker-apps/
Long, Kelley. “6 Ways To Track Your Spending.” Forbes. https://www.forbes.com/sites/financialfinesse/2017/08/17/6-ways-to-track-your-spending/?sh=8433e2e46503
Neidel, Courtney. “5 Steps for Tracking Your Monthly Expenses.” NerdWallet. https://www.nerdwallet.com/article/finance/tracking-monthly-expenses
