Saving money can be difficult. I used to think that “saving” meant being able to reserve a considerable amount of money all at once. I had never believed that a few bucks put aside on a monthly basis would make a difference in any way until two years ago when I got serious about taking advantage of the cash back rewards program that my credit cards offered. I had been avoiding credit cards in the past because they only meant “trouble” to me. There were times when due to lack of education my spending got out of control. Because I was unable to pay in full for my purchases I started paying a lot of money in bank fees.
I eventually slowed down my spending by using cash and debit cards. I used occasionally credits cards just to keep my accounts active. I was skeptic at first about the cash back rewards program because I thought I had to spend quite a bit of money to get a decent percentage back. I had ignored it for a few good months until I saw extra money listed on my statement.
Then I said to myself: “What if I charged everything I bought or owed?” I started with my regular bills that added up to about the same amount every month. Next, I charged all my purchases whether they were a hamburger or kitchen appliances. Because I was able to pay my balance in full each time my monthly bonus was slowly getting bigger. The itemized credit card statement helped me keep my spending on track.
This was money I did not count on. I added it back to my account. It was something like “leave it and forget it”. Last year, I thought it would be a good idea to let it accumulate so I can use it for holidays gifts which I could never budget well for. I used to charge all my holidays shopping because I couldn’t save money for them in advance and would normally take me a whole year or more to pay them off. In the meantime, other unexpected bills were piling up.
I got about 40$-50$ a month cash back which brought me an unexpected “Christmas bonus” of $500-$600 at the end of last year. Buying the gifts that would just make someone “happy” because of how nice and expensive they were had to stop. Setting ahead of time how much I had available to spend on gifts was a good way to establish how much I was going to spend for each one on my list. I stayed very firm about spending only a certain amount of money on each person and gave each one of them the option of choosing their gifts within my planned budget. This way, I paid immediately for the purchases that I still charged on the credit cards because the small portion of how much I spent would come back to me to be used for the next holiday season. At the same time, I demonstrated to the bank that I was a responsible spender and received a credit limit increase and improved my FICO score.
In order to make the cash back rewards program work for you you must stay withing a realistic budget and constantly monitor your purchases. If your average monthly spending is around $1,000 and you are suddenly showing a balance of $1,500 on your statement, knowing that you did not have any unplanned purchases, then it is time for a re-evaluation. Maybe you need to cut down on that gourmet coffee you drink every day, pack lunch and eat more at home, or have the movie night in front of your own TV with your family and popcorn instead of going to the theater.
There are many good deals out there right now where the banks offer you cash for your purchases. The idea is simple. The more you spend more money you will get in return. If you are a credit card holder, have good credit, and are able to pay your balances in full you should shop around for the card that pays you the highest percentage and is suitable to your needs. If you often eat out then look for the card that pays you the most for dining out. If you drive a lot each day search for the card that gives you the best deal on gas.
You should also look at it as an excellent way to save money for important things you find difficult saving for such as your child’s savings account, a family vacation, your retirement, or making an extra payment a year on your mortgage.
I hardly use any cash these days. I don’t even know how the hundred dollar bill looks like anymore. Knowing that a cashless society is inevitable in the nearest future in the United States, some education in how to use plastic responsibly comes in handy at any time especially if you are a first time credit card user that is trying to build responsible spending habits. Every one has monthly bills that need to be paid. Why not charge them? And if you can get back some of the money you spent, why not?