Often people assume that I am “anti credit card” because I am a Financial Planner… but that is not the case at all. I personally have one credit card, which I use responsibly and value, as it actually helps me manage and stick to my budget and even helps me achieve my financial goals, including my personal lifestyle goals.
Here are my top personal hacks for using a credit card to your advantage and make juggling your budget easier and achieve your financial goals.
1. One and Only
I only have one credit card and that is it. It makes life so much easier to track, review and manage my living expenses and budget as I only need to refer to the one credit card statement. In checking the statement, (which I can quickly access on my phone through my app), I can make sure that I am sticking to my budget and if I do go over in one spending area, I can proactively cut back in another area, so that I never get myself into trouble. This trick saves me time and money. So if you are going to have a credit card, keep it to just one.
2. Low Woes
I always recommend paying your credit card off in full every month, it is part of being responsible with your money and respecting the benefits of a credit card. However, if for some reason I may not be able to pay my credit card off in full, (such as an unexpected emergency exceeding my savings), I have comfort in knowing that the interest rate I will be charged is competitive, meaning that it will be much quicker and easier to pay the card off, which means I’ll be back on my merry way again, sticking to my budget. So ensure the interest rate is competitive on your credit card.
3. Interest Free Whilst Earning Interest
Whilst I don’t personally do this, this is a trick that Tom, my partner does and one that I approve of, as he does it responsibly and uses it to his advantage. He will use his credit card for his living expenses, using the interest free 55 day period, and then he pays it off in full with one quick efficient sweep, as his bank account is linked to his card. This means that during the 55 days interest free period, he is able to maximise the interest that he earns on his savings and still pays the card off in full within the 55 day period. So check the interest free period on your card to see how long it is.
4. Fees Please
Whilst I value my credit card, I am not a fool for the fees. I need my annual card fee to be competitive otherwise the benefit of the credit card erodes away. Credit cards that go into the hundreds for their annual fees don’t always stack up, so make sure your card fee is competitive and worth it.
5. Movement and Money
Juggling a newborn and a 6 year old along with two dogs and two businesses means I am often on the run. Having my credit card connected to my phone (or even wearable tech) means that I can pay for my morning muffin and coffee with a quick tap and get on with my day, not even needing to pull my wallet out. When my day finally slows down, this is also where I can check my budget against my transactions. So having a credit card that can be conntected to your phone is a welcomed efficiency.
6. Counting Proactive Savings
To make sure my savings really count, I always transfer the money that I have saved into a separate savings account and then put that exact dollar savings towards a financial or lifestyle goal of my choice. For example, say that in my budget I allow $100 per week for lunches and coffees, but I only spend $60, I will proactively transfer $40 from my savings account into my into a separate savings account or even to my credit card, helping pay for the goal. This habit system feels good but it also feels responsible knowing that I am using my credit card to my financial goals’ advantage.
So as you can see, credit cards when used wisely can add value, efficiency and actually help you in achieving your financial goals.
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