Yes, You Can Have a Credit Card and Stick to a Budget

Credit cards are an integral part of this couple's budget.

There are a lot of people who believe it’s impossible to remain financially responsible if you’re still using a credit card. Many will even go as far as suggesting that you should cut up your credit cards, cancel all of your accounts and never look back. What if I told you though that you don’t have to go to these extremes because there’s another option you could consider?

In 2015, we realized that our financial situation was essentially in shambles and we needed help. We were living paycheck to paycheck, swimming in debt and we were living way above our means. We realized that we had to start working hard to turn our situation around. And, over time, we found a strategy that worked for us.

Read More: Want to Break the Paycheck-to-Paycheck Cycle? Stop Caring About What People Think

We Follow a Detailed Budget

In the past, our biggest issue was the fact that we had no idea where our money was going each month. To fix this problem, the first step we took was to sit down and come up with a detailed budget we could follow. By putting all of our expenses into a spreadsheet and tracking our daily spending habits, we can see exactly how much money we spend each month. This helped us figure out where our problem areas are and what we need to do to fix them.

We initially started using the “cash envelope method” to help us stick to the budget we created. That only lasted for one month because the idea of carrying cash wasn’t appealing to us, so we started using a “digital envelope system” instead. With this method, we use credit cards to do all of our budgeted spending, and we keep track of our envelopes with apps on our phones.

Start Budgeting Now: 15 Easy-to-Use Budget Templates

We Automate Everything

Using credit cards to handle our monthly spending allows us to automate much of the process. We’ve put all of our bills and utilities enrolled in auto-pay, so we never have to remember to log in and make bill payments manually (we’re forgetful).

This takes a great deal of financial stress off of our shoulders because we can focus on all of the other things we need to do each month. We also keep one month’s worth of expenses in our checking account to make sure we always have enough money to pay off our credit cards in full each month.

Check Out: How to Save Money Paying Bills With Automatic Payments

We Only Use One Credit Card

No, we don’t plan on getting rich from rewards points or anything like that, but the option to earn money back on purchases we’ll be making anyway is too good to pass up. There are a lot of techniques out there for making the most out of credit card rewards points and bonus offers, but our strategy is simple: We only use one credit card at a time.

Over the years, we have used different credit cards for this process. The ones we typically choose to use have hefty sign-up bonuses that can be earned once you cross a pre-determined spending threshold. Luckily for us, we can easily meet these minimums without changing our spending habits very much.

Recently, we used the rewards points we’ve collected to pay for most of our all-inclusive vacation trip to Mexico. This wouldn’t have been possible if we had still been using cash or our debit cards to handle our budget.

Not only does this strategy help us earn a few extra bucks each month, but it also gives us a few other benefits and protections:

  • We can see all of our transactions in one place.
  • We get additional insurances on our purchases and rentals.
  • Our credit scores benefit from the positive credit card usage.
  • If we lose a credit card, it can be canceled without the same pain of losing actual cash.

More on Budgeting: 50 Ways to Live the Big Life on a Small Budget

And That’s It

This strategy might not work for everyone, but we’ve found that it helps us stay on track financially. Using credit cards responsibly comes down to deciding on a strategy that works and sticking to it.

We never imagined using credit cards could help our budget in a positive way, but we now know that the two can mix.

Read More: 10 Most Effective Ways to Budget Your Money at Any Age

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