I always am curious how people spend their money, for example, are you strictly a debit/credit kinda gal, or do you like to pay for everything in cash? Today I’m sharing how I spend my money and how I log all my purchases.
Debit vs. Cash vs. Credit
I’ve really tried to make the cash envelope method work for me over the years but found I’d almost always end up borrowing cash from other envelopes in order to get the exact denominations I’d need. Also, what if I didn’t want to pay for something in cash or wanted to make an online purchase? I would then have to go re-deposit that amount into my bank account and then order it online, it got to be too much work and too confusing. Instead, while I was in debt, I paid for most purchases with my debit card and now as a debt free person with a really good relationship with money, I use a credit card.
A note – You know if you spend more using credit. If you do, or if you can’t pay off your balance in full every month, don’t use it. You lose every single benefit to credit cards the moment you pay a dollar in interest. I have my credit cards on autopay and treat them exactly like I did debit cards.
They even get logged in my budget like debit, as if the money has already been spent, because it has. Credit cards can be a great tool if used responsibly. But if you aren’t in a good financial place or part of your journey to use them, they can absolutely push you backwards. Use carefully.
For my recommended credit cards, check out the BG Toolkit. I’ve got cards for credit repair, points, cash back etc. and most have no annual fee.
For the things I do purchase in cash I make sure to save a receipt for it so that I can reconcile it with my budget every week.
Once a week, I like to pull out all the receipts I saved over the past week and pull up my banking info. I then put all those amounts on those receipts into the correct category on my budget spreadsheet and make sure that all those purchases correlate to the same amounts as the purchases listed in my bank account.
*A note! When I first started budgeting and managing my money, I logged my purchases DAILY. This was essential so I could go into the next day with an accurate idea of how much I had left in each category and really paid attention to my spending. Eventually you will be able to go longer without reconciling, and stay on budget!
Doing this makes sure I could also catch any fraudulent activity on my account and that I’m not missing anything. This process is simple and nothing revolutionary but it’s exactly the kind of process that works for me and my lifestyle.
My secret weapon
Whenever I get extra money, say for my birthday or the holidays from my family I like to call this my mad money fund. This mad money is for when you go out for drinks with friends unexpectedly or you want to treat yourself to a mani/pedi. It can be for whatever you like and essentially extra money that you don’t have to reconcile into your budget. You can also do this if you have extra money leftover from your restaurant category at the end of the month and put it aside for your mad money fund. Having a little money set aside for unexpected fun activities is always something I like to do.
I would love to know how you spend yours do you do cash envelopes do you do something completely different? Or do you put everything on your credit card?