Read in 5 minutes PublishedJanuary 3, 2023 by Nicole Dieker span> Author Nicole DiekerArrow Right Personal Finance ContributorNicole Dieker has been a full-time freelance writer since 2012. She graduated from college in 2004 and became a personal finance enthusiast when she found a tattered copy of Your Money or Your Life in the public library seeking financial guidance. rice field. In addition to her contributions to Bankrate, her work has been published on her CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as a writer and editor of The Billfold, a personal finance blog where people talk openly about money. Dieker also teaches writing, freelancing, and publishing classes, and she works one-on-one with her authors as a development editor and copy editor.

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Nicole Dieker EditorMariah Ackary Editor Mariah AckaryArrow Right EditorMariah Ackary is a Personal Finance Editor who joined the Bankrate team in 2019 to help people make better decisions with their money. Excited to help. Send any questions to [email protected]

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There's never a bad time to get serious about your budget, but the start of the new year is a great time to assess your spending habits and set goals for the coming year. Check back each week for new financial fitness insights and tips to help you succeed in 2023.

Whether you're planning long-term financial goals like home ownership or protecting your assets from the uncertainty of a potential economic downturn, take a close look at your spending habits. , households can benefit by discussing whether those habits should be maintained. .

This process allows you to see where your money is going from your credit card statement and determine if any adjustments are needed. Here's what you need to know when using your credit card statement as a budgeting tool.

How to budget using your credit card statement

Your credit card statement contains more useful information than you might think. Most people get their monthly credit card statement in the mail, but you can also access your statement at any time by visiting your online credit card account. Here are five ways you can use your credit card statement to inform your monthly budget.

Review Each Purchase

Once you have your statement in front of you, review each transaction listed. By reminding yourself of the purchases you made with your credit card during your last billing cycle, you'll be better prepared to assess whether you want to continue making those types of purchases in the future.

Please note the following: How does each transaction make you feel—Are you glad you made that purchase, or did you overspend or buy something you didn't need?

You should also check your payment and credit list. Not only does it tell you how much money you're spending to pay off your credit card debt, but it also tells you if you're frequently returning your purchases (which could suggest you're buying more than you need). ) and whether or not the item was returned. Redeem your credit card rewards for statement credit. When every cent counts, smart use of credit card rewards can make all the difference.

Evaluate Interest and Fees

Check fees and interest that may have been incurred in the previous month. If I am charged fees or interest, is there a way to reduce those charges in the future? Should I consider a no annual fee credit card, or transfer my outstanding balance to a balance transfer card with a 0% APR implementation period? Should I move to?

Once you understand what's on your credit card statement, you can: Use that information to positively change the way you shop, spend, save, and pay off debt.

Also, if you are having trouble paying your credit card due to unemployment, medical bills, or unforeseen financial hardship, contact your credit card issuer for assistance programs that allow temporary relief or forgiveness. Ask.

Check for recurring charges

Does your credit card statement have many recurring charges? Subscriptions, beauty boxes, meal kits, gym memberships, etc. are often automatically charged to your credit card each month.

Evaluate each of these fees, ask yourself if the monthly fun is worth the monthly fee, and decide which subscriptions you are prepared to cancel.

You can also adjust the cost of your subscription by sharing it with other users. A Bankrate study found that 56% of adults share subscription service accounts, giving them Netflix passwords or singing together on Spotify.

Know what you buy most often

Once you've verified your recurring charges, it's time to start making frequent purchases. Grocery stores, coffee shops, restaurants, and takeaways tend to make up a large portion of our daily spending. However, you may also find yourself frequently buying clothes, books, toys for your children, or entertainment for yourself. These purchases add up quickly.

The great thing about frequent purchase categories is that you can cut back on your spending without having to completely remove those types of purchases from your life. For example, you can save money by ordering pizza less often, but you don't have to give up your favorite pizzeria forever.

It's your job to create a budget that balances what you want to do. Buy what you can afford — this may be easier than you think.

Categorize your wants and needs

The key to a successful budget is your For example, the 50-30-20 budget is a popular template that suggests spending 50% of your money on needs, 30% on wants, and 20% on savings. .

Not everyone can split their money like this: 50-30-20 method. Some spend her 80% of her income on rent, bills, and other needs, while others with irregular incomes may have their own ways of managing cash flow. That said, finding a balance that helps cover the necessities of life and allows you to spend a little money when you choose will help you stick to your budget in the long run.

Rewards Make sure your spending matches your spending

Once you have a budget, look for a credit card that rewards your ideal spending habits. For example, if you don't plan to travel much this year, you might want to switch your daily spending from a travel loyalty card to a cash back card. If you're looking to order less takeout and plan more meals, stop using credit cards that reward eating out and start using credit cards that reward grocery shopping. It is recommended.

Some credit cards show a spending breakdown. Helps you understand which categories are spending the most in your mobile app. In retrospect, if you see consistent discrepancies between your top spend categories and reward categories, consider getting a new credit card that addresses non-reward purchases. Having the right cards in your wallet can save you more money in the long run. Don't forget to redeem your rewards once you've earned them.

Using a Mobile Banking App as a Budgeting Tool

There are many popular budgeting apps such as Mint, YNAB, and PocketGuard, but many of people use mobile banking apps as a useful budgeting tool.

Many of these free apps offer useful financial metrics, such as the ability to track your spending by category and compare this month's spending to last month's spending. Some mobile banking apps, such as the Capital One and Chase apps, also offer tools to help you build your credit score.

Want to use your mobile banking app to plan your fiscal year? This helps you understand where your money has gone over the last 12 months. Then ask yourself what you want to change in the next 12 months.

If you want to save more money, consider setting up a split account deposit that automatically transfers a portion of every paycheck to your savings account. Or use a savings app that monitors your spending habits and regularly transfers small amounts of money to your savings account. If you want your credit card bills to always be paid on time, consider setting up automatic credit card payments. You can also set up mobile banking alerts to track your balance and send you alerts when you approach certain thresholds.

Check out mobile banking apps.

Conclusion

Many people need to think a little more carefully about their budgets now. Your credit card statement provides important information.

Once you have a little more idea of ​​what you put on your credit card each month and how much it costs you, you're ready to make a worthwhile change, both at the actual price and additional costs like interest. be ready. Get started with Bankrate's budget calculator.