It can be tricky to manage your credit card spending and keep it within your monthly budget. The reason is that we budget for a calendar month, but our credit card statement generally happens at a random mid-month date. My credit card statement cycle is from the 8th of each month to the 8th of the next, but my payment must always be made by the 3rd. Now that’s just confusing!
It would make so much more sense if the statement cycle just ran over a normal month so that we could easily track our spending. But this way, the banks keep us confused and we just keep spending money never really being in control.
Let’s take a closer look at the issue and I’ll show you how to stay in control with just a very simple calculation. It will just take a few minutes of admin and a weekly checkup on your statement to make sure you know what’s happening.
Step 1: Access your statement
Make sure that you can easily access your statement whenever you want. You can probably do this online, via an app or possibly even some texting service. However you do it, be sure that you’re set up as you will want to check your balance weekly.
Step 2: Reminders
- Set a few reminders on your phone
- 1st of every month – check your balance
- Set up a monthly reminder to pay your card balance on the same date each month
- Set reminders for the 7th, 14th, 21st and 28th to just check-up on your balance (it will soon become a natural habit to do this, but reminders will help in the beginning)
Step 3: Create a spreadsheet to manage credit card spending
Create a spreadsheet similar to this. My calculations assume that I make a payment near the end of each month, so you must just take into account when you make a payment.
You need to know what the starting balance on your account is. This is how much money you can spend. Then, enter the amount that you budgeted for your credit card spend.
The payment due amount will only be known later in the month, and the real final balance obviously only at the end of the month.
Because my monthly payment happens near the end of the month, my weekly check-points are simply the opening balance less a quarter of my budgeted spending. These figures are just rough estimates to what my account balance should be and if there is a major discrepancy I can always look at the transaction details.
The Predicted Month end balance is the Starting Balance less spending plus the payment made into the account.
All it takes to track your spending is a weekly check-up of your balance to see that you are on track.
Don’t let the banks mid-month statements confuse you, take charge of your money!
If this process seems a little confusing or tricky you can also use an app on your phone. There are many free ones to choose from but I personally prefer a paid-app called YNAB. See why & how I use YNAB.