Budgeting is important for anyone looking to build wealth. One of the most overlooked tools you can have in your skillset is simply tracking your own expenses and following a budget.
By tracking your expenses, you can better understand what you are spending your money on and if it’s as you expected. For instance, checking my own recent transactions in the past year, I found an unwanted Disney subscription, so I decided to cancel that for Crave…
For someone like you looking to budget, there are various benefits to budgeting so let’s get into it.
What are the benefits of budgeting?
Before I get into which payment type is best for budgeting, let’s talk about the benefits of budgeting, which include:
- Managing your money effectively;
- Ensuring you don’t spend money, you don’t have;
- Allocating investments for future spending or retirement.
These benefits sound almost common sense, but it becomes extremely empowering when you build the fiscal discipline to budget. It feels great to see a positive cash flow for the month, or in the case of negative cash flow for the month, you have something to work towards to change. It’s also great knowing where your cash comes and goes instead of wondering whether buying that new laptop will break the bank.
Which payment type is best if you are trying to stick to a budget?
When we buy something, we either use cash, credit, debit, or even other types of payment methods (Paypal, Crypto, etc.).
Simply put, the easiest payment type to use is cash when budgeting. You can designate at the start of the month to spend $500 for groceries and easily track that throughout the month.
However, cash can be quite a nuisance.
I mean, c’mon – who wants to carry around cash and coins? For myself, I’m always finding coins in different jackets or even my cats playing with coins. So, there’s definitely a problem here…
For other payment types, you can use our debit and credit cards. These are the most common ways you pay with and for a good reason for most of us. It is quite simple to tap your card and not worry about having the exact amount of money or dealing with change. However, the issue with credit and debit cards is that it is easy to forget about the transactions you made.
Additionally, PayPal and other digital forms of payments have a similar issue with credit and debit cards.
So, these various payment methods have their pros and cons, but instead of asking which payment type is the best for budgeting, we should be asking, “what tools can we use to help us budget with?”
What budgeting apps can you use to help with budget management?
There are various budgeting apps out there, and I have used RBC, TD, and BMO, which have budget tracking features. However, I have found these apps provided by the big banks have issues with user experience or issues with their categorization system.
‘Mint’ is the current app I use for budget tracking. When you sign-up and join, you connect your bank accounts, and Mint will categorize all your transactions and features to track your investments, checking and savings accounts, and other investment accounts.
It will use all this data to create a custom budget for you and help you keep track of your transactions.
Ultimately, there are many payment methods you can use to help you budget better. But for those of us who are lazy to carry cash and deal with all the nuisances, using credit and debit cards with a budgeting app will help do wonders.
I highly recommend everyone to use a budgeting app as most are easy-to-use and give you more peace of mind.
Have any other tips you would recommend to us? Let us know in the comment section below!