Why Every Homeowner Needs a Credit Card

One very important part of owning a home is budgeting your home expenses. Planning for everything from home improvement projects to everyday household purchases can be a lot of work, but it’s necessary to make sure you remain in your budget. Credit cards and budgeting go hand in hand. Used properly, credit cards can increase your wealth and help you stay on budget. Credit cards allow you to manage cash flow by giving you 30 days to pay. You can also track every expense you make, which is great for budgeting. The cash flow advantage helps you smooth out your income spending needs throughout the month so you aren’t stuck with a big expense before payday. Tracking your expenses helps you understand where you spend your money on a month to month basis.

How to Begin Budgeting Home Expenses

Create monthly spending categories at the beginning of each month using last month’s income. For example, you typically know what many of your bills will cost each month – mortgage, homeowners insurance, etc. But for the variable stuff, you can make estimates. Here’s where credit cards come in handy. Some of the biggest variable and ongoing expenses are in grocery and miscellaneous categories.

How to Use Credit Cards to Stay on Track – and Why it Works So Well

• Check in once or twice per week. Start the beginning of each month with a set amount to spend on groceries and other miscellaneous expenses. It’s important that to check in to see where you are at least once per week. You can usually access each of your credit card accounts online, making this part is easy.
• Another reason credit cards work is that you don’t have to keep receipts for stuff like groceries, gas, and haircuts. Since all of your purchases are listed online, it’s easy to keep track of your spending that way.
• Pay off your credit card 2-3 times per month: This is the real key to making credit cards work for you instead of against you. Since you start each month with a dollar figure for spending, paying off your bills helps to stay on budget and keeps you accountable. Meanwhile, paying off accounts frequently ensures that you will never pay interest on your purchases.
• As the month progresses, keep an eye on your spending in all of your variable categories. And for the most part, when it’s gone, it’s gone. When you run short on grocery funds the last week of the month, opt to eat food in the pantry or use up extras in the freezer.

In addition to helping with budgeting, rewards cards can provide additional benefits when you use them to pay all your monthly bills. The more regular spending you can put on cards, payments and purchases you’d be making anyway, the more points you rack up for travel, merchandise, and cash rewards.

It’s important not to think of using credit cards as a free-for-all. Maintain your budget, stay within your limits, and watch your savings grow!