Managing day to day expenses can be daunting, especially the ones with big numbers. However, with a bit of organization and planning, it's possible to keep expenses in check and even save money in the process.
Using credit cards
Dave Ramsey will disagree with me but if managed properly, credit cards can be a great tool. As you probably know the two main reward types they offer are cash back and airline miles. Personally, I prefer cash back because you can use it however you want. Below is an example of how I am using credit cards to maximize rewards.
|Category||Cash back||Credit Card|
|Groceries||5%||Citi custom cash|
|Gas||3%||AMEX blue cash everyday|
|Online purchases||3%||Bank of America customized cash rewards|
As you see above, I have specific credit cards for specific categories of expenses that offer the most rewards. Each month, I get about $50-60 in cash back which equals to about $720 a year. That's quite a bit of money to leave on the table if I didn't use credit cards.
Another strategy is to rotate credit card usage based on the current rewards offerings. Many credit cards offer limited time bonus categories, such as 5% cash back on gas purchases during the summer months. By paying attention to these temporary rewards categories and using the right card at the right time, you can maximize rewards and save money on expenses.
Credit card offers vary time to time but you can find good ones if you keep an eye out. However, be mindful of the annual fees - I personally use $0 fee cards but depending on your personal finances, a card with an annual fee might still work for you.
It goes without saying that using credit cards responsibly is key to maximizing rewards. Be sure to pay off your balances in full each month to avoid paying interest, which can negate the benefits of any rewards you earn. By using credit cards strategically and responsibly, you can effectively save money and make the most of your expenses.
Using savings buckets
Vehicle maintainance, taxes, vacations are all periodic expenses we make. One effective way to manage these expenses and budget for reoccurring expenses is by using a "savings bucket" method. This can easily be done with most banks these days where you can create different buckets in savings accounts. Once you have estimated the budget for each category of expenses and created the buckets, you can setup automatic deposits for when you get paid. By dividing your savings into specific buckets, you can easily track your progress and make sure you have the funds available when you need to pay for these expenses. This method can help avoid overspending and reduce the risk of financial surprises.