We all have different spending habits and ways of working with money. That’s why you need to find a way to budget that works for you! Especially a way to budget by payment forms such as cash, credit card, ETF etc.
Something that I find useful is to know how much money is spent via automatic payments, how much money I spend as cash, and how much on my Credit Card. This helps me to plan how much cash I need or how much money I should keep in my bank account.
Having multiple credit cards or store cards makes it much harder to track. If that’s the case for you then you may want to ask yourself whether you need them all, and if not, start cancelling them. We’re often tempted by financial institutions to open new accounts, but they can often just complicate our finances.
TIP: One tip for taking charge of your money is to keep things simple!
Budget categories by payment forms
Look at the example in the image. I have indicated on my budget which categories are paid via Automated Electronic payment, by Cash & by my single Credit Card. In reality, your spending will never be exact, and unplanned things happen. That is expected and not anything to worry about. If you know what your plan was, you can identify where and why things changed.
The advantage with categorizing spending by type is that you can draw the cash you need for the month upfront. This will help you save on banking fees. You can also keep track of your credit card expenses as you know what is budgeted for your card. When doing this exercise though, have a look at the advantages of using cash and consider using cash for more of your spending.
This is just another way to understand what you are spending money on, and how. Take this concept and make it work for you with your specific circumstances.
As always, take charge of your money!