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How Do I Stick to a Budget When I Charge Everything?

Credit Card Basics, Credit Cards
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Use your budget and your credit card in tandem to stay on top of spending.

It can be oh-so-easy to overspend when using credit cards, especially if you are gobbling up rewards points by charging everything from toys for your puppy to car rentals in Jamaica. Even if you are a responsible spender and have a budget, sticking to that budget can be tricky when everything goes on plastic and you don’t really know just how much you’ve actually been blowing through.

Here are some ideas on how not to overspend.

Re-engineer your budget

The first action item is to make sure your budget actually reflects your spending. It will take some effort, but go back to your credit card statements and all other bill receipts from the last 12 months. Add up the expenses in each category – rent, groceries, gasoline, etc. – and take a look at the totals. Divide by 12. This should give you a good idea of just how much you’re spending each month in each category.

Most credit card statements even break this information out for you.

Now you’ll have a general idea of how much to budget for each month.

» MORE: How to pay off debt

Do a weekly check-up

Every Friday or Sunday night, tally up your expenses for the week. First, add up everything that doesn’t get charged. Then log on to your credit card account and add up expenses by category, as well as the total spent that month. If you are, say, halfway through the month, then you should be halfway through what you expected to spend with your budget.

If you’ve spent less than that amount, that’s great! If you’ve spent more, then you know you need to back off on spending for that next week, at least.

Do a monthly check-up

You’ll end up doing this anyway if you do a weekly check-up, so compare your final monthly tally with your budget. See where you land.

Adjust the budget if needed

After three months, if you find that one category has routinely higher expenses than you budgeted for, then accept the fact that this is something you spend money on. Reduce expenses in another category to make up for it, or adjust your behavior in that category to bring it in line with the budget.

Consider a credit limit restriction

If you’ve tried all of the above and your routinely overspend, then you may need to restrict your own behavior. Look at the total amount your budget dictates that you are allowed to spend on credit cards each month. Call your credit card company and ask to have a credit limit that tops out at that amount. Make sure there is no over-the-limit fee assessed, where you can exceed that amount but you get dinged with a charge. Instead, make sure the company will deny charges over that limit.

Do you notice a common thread here? It’s about communication – between you, your budget and your credit cards. These are not separate entities that have no relation to each other. They all work in tandem to assist you with responsible behavior. Use them.

Piggybank squeeze image via Shutterstock