Is Budgeting Better With Credit Cards?

A silver and blue visa card in a blue jean pocket

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Question about budgeting using credit cards

I’m using your America’s Cheapest Family Budgeting System and love it. I really like how the budget system allows for a family to “save” in advance for purchases and designates money for different specific categories.  

Here’s my Budgeting Issue

We are not in debt. but we use our credit card for every purchase. And then we pay our credit card every month, completely. I know this is not the “norm” for most people.  We like this because we use fewer checks and we also receive cash back, which adds up quickly. We are able to use our cash back to pay for 2 credit card bills each year! So trying to do your budget the other night, its been very confusing. We have our cc statement for all purchases. The charges are from March, but we pay the bill in April. I can’t seem to figure out how to do this system every 2 weeks or once a month from previous month?  We’re always behind one month?

Help, please.  I am assuming that maybe this has been brought up before and there is a simple tweak to system for this?  Thank you for your time and I really enjoyed reading your first book, “America’s Cheapest Family Gets You Right on the Money.”

Answer about budgeting better

Congratulations for taking the time to set up your budget. This is one of the reasons we avoid using credit cards—it makes budgeting more difficult, but . . . not impossible.

Budgeting with Credit Cards — Step 1

Simply write down each credit card expense in your checkbook register as you spend it. Since you only use your credit card, your checkbook register will only contain charges from that credit card—this is easier than using a credit card in addition to a debit card / checks or a checking account.

Budgeting with Credit Cards — Step 2

Then record each expense on the individual account pages in the America’s Cheapest Family Budget System when you do your budget every pay cycle. When the credit card bill arrives, check off each item in your checkbook as you would when you are balancing a checking account to the bank statement.

Budgeting with Credit Cards — Step 3

Write one check (or do an automatic payment) to cover the full amount of the credit card bill, but don’t record that expense in your budget (if you did, you’d basically be entering double the amount paid, because you already recorded each individual expense). Record the check in your checkbook register (it’s really just a formality and a way to confirm that the payment was made), but DON’T subtract that total amount from your checkbook balance . . . because all of the individual expenses have already been recorded in the checkbook and in the budget.

Budgeting with credit cards is a little more work, but it can be done. You’re smart and careful, with a little persistence and creative thinking you’ll solve this problem and be on your way to becoming a black-belt budgeter.

Have you been able to make credit cards work with your budget?

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