How to create a spending plan for your credit card
Are you struggling with credit card debt? If you don’t already have a spending plan in place, it’s easy to lose track of your purchases and spend more than you want to or can afford.
But there are ways to keep your spending under control if you take the time to figure out how much you can comfortably spend on different items.
With careful planning, you can avoid overspending and get back on track with your finances!
Check out this handy guide on how to create a spending plan for your credit card!
1) Know where your money is going
The first step in creating a budget is knowing where all of your money is going.
You can find out by taking stock of what you spend on in the course of one month, preferably using each and every one of your cards.
This will give you an idea of how much cash flow you have available for the month, as well as how much money you’re throwing away each month on things that you don’t need.
Afterward, take this information and plug it into a spreadsheet to calculate how much you owe on each card so far.
If you want to be proactive about paying off debt, put more than just the minimum payment towards paying down any balances.
If you don’t know how to use Excel or create budgets, ask us for help!
And remember, if you’re making over $3k per month and aren’t carrying a balance on your cards, then it’s time to ditch them altogether and apply for a 0% interest credit card.
2) Set spending limits
It can be easy to feel like you need to spend more when you have more available funds, but it’s important not to get ahead of yourself.
Before signing up for any new cards or making any large purchases, make sure that you’ve set some limits on what you’re able to spend.
This will help keep your spending in check and ensure that you don’t get too far into debt.
To create a budget, all you’ll need is the monthly statement from your credit card company or online banking account (which should show you all of your transactions) and paper or Excel spreadsheet.
The first step is to total up how much money has been spent so far this month. Next, list the amount of money still available to spend this month.
If there are less than 30 days left in the month then simply subtract 30 from the number of days remaining.
Then divide the remaining balance by the number of days in order to figure out how much can be spent each day.
Now it’s time to set some limits based on where you want your balance to end at the end of the month.
3) Make a budget
Create a spreadsheet or list of what you want to buy, how much it will cost, and the payment date.
If the purchase is over $500, make sure to include all of the details from our guide on how to get approved for high credit limits so that you don’t have to worry about getting declined.
Once you know what you want to purchase and when, set up an alert on your phone or computer so that you know when it’s time to pay.
After each purchase, write down how much you spent in your budget. Keep checking back to see if the item has been delivered or if the deadline for paying off the bill has arrived.
You’ll be surprised at how quickly small purchases add up- but by keeping track of them in advance and planning ahead, it’s easy to stay within your budget!
To get started, just take out your credit card and write down the balance, which should be zero. Add up all of your bills due this month and multiply by 12.
Add this number to any monthly expenses like rent or car payments (those things should go first!)
Next, subtract anything you might earn this month – money you could bring home after taxes are taken out.
4) Track your progress
To start, divide the amount of money you have to spend each month by the number of weeks in that month.
The result is how much you should spend per week.
Next, list out your monthly expenses and estimate what they will cost for a typical week and add them up.
If the total is more than what you can afford to spend in a week then make adjustments.
Either cut down on the things you buy or increase your income.
Remember to stay within your budget and try not to go over it at all costs.
It’s always better to have extra money left over than to max out your credit card.
Finally, reward yourself with something after staying within budget for an entire month.
It may be something small like buying a new book or going out to dinner but it’s important so celebrate when you do well!
Staying within budget every single time builds momentum.
Even if there are months where you’re unable to keep track because of high expectations expenses, as long as you return back to your old ways once everything settles down again – those few bad months won’t matter at all.
A realistic weekly expenditure is $30-$50 depending on your situation and how many people are dependent on your salary.
5) Reward yourself
If you’re having trouble sticking to a budget, it might be time to reward yourself.
Give yourself small rewards for meeting milestones in your budget and build up some positive momentum.
You can even set milestones for every $500 in debt that you pay off.
For example, when you pay off $500 of debt, treat yourself to something nice like new shoes or an afternoon out on the town.
It’s easy to stay motivated and on track when you feel good about what you’re doing.
In addition to keeping the excitement going, this is also a great way to make sure that you don’t put all of your extra money towards paying down your credit card bill.
After all, while paying down your debt is important, so are things like food and clothes! There are a few other tips that can help keep your spending in check:
Make one large purchase per month:
Rather than buying many smaller items throughout the month, focus on one larger purchase.
That way you’ll have less temptation to buy little things because they won’t fit into your monthly budget.