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Monitoring Your Credit Card Spending
September 1st, 2013
Despite this, according to a recent study by CardHub.com, Americans spent 424 percent more on their credit cards in 2011 when compared to the same period during 2010, and 577 percent more than in 2009. As a direct result of this massive increase in spending, many Americans are finding it harder than ever to accurately keep track of their credit card balance. Failing to do so, however, can lead to dire consequences.
As a result, we thought our readers would appreciate a simple, four-part plan to help you monitor your family's credit card spending. No over-your-head fluff or financial-speak; just straightforward, helpful advice.
Four Ways to Monitor Your Credit Card Spending
1. Carefully record each transaction.
Each and every purchase made on your credit card should be carefully tracked. The easiest way to do this is to write down what you purchased, as well as the price you paid. This can be accomplished using a small notepad carried with you at all times, or even with a smartphone that offers the ability to add notes. You can also carry a heavy-duty envelope to keep your receipts safe and sound for later retrieval.
2. Utilize technology.
Most credit card companies of a wide array of tools to help you track your credit card spending. A few of these options are transaction alerts, text messaging, and online account access.
Transaction alerts are typically used to help keep an eye out for fraudulent activity, but can also be very useful when monitoring your credit card spending. In addition to being notified when unusual activity occurs on your account, you can also be alerted when your account reaches a specific balance.
With smartphone use continuously rising, many lenders are recognizing the opportunity to better serve their customers through text messaging. In addition to viewing a list of your accounts and obtaining assistance from customer service, consumers can also find out additional information regarding their account balance and transaction history. For consumers on the go, text message banking can be a great way to stay ahead of the game.
Nearly all banks now offer direct access to your account via the Internet, which offers many of the same, and often more, options than visiting the bank itself. Viewing your online account activity is a great way to monitor your credit card spending, since the transaction list is typically very detailed, and can even be categorized by type (i.e. groceries, retail, gas, etc.). This way, you're always able to see the time and date, the amount you spent, as well as the retailer you visited.
3. Create a spreadsheet.
Once you've faithfully tracked your spending, whether through manually keeping receipts or logging on to the bank's website, you're now in a position to create a spreadsheet. This may be the most important step toward solid monitoring, because it casts a hard light on your family's spending habits. This can be a shock to find out exactly how much you're charging on credit cards each month, but is often a great awakening.
You can create your own budget spreadsheet, or utilize numerous free options that are available online.
4. Set a budget, and stick to it.
Now that you've managed to track your credit card spending, and to tally your monthly credit card expenses, it's time to make a budget. Regardless of your level of income, the key to financial independence is spending less money than you earn. It may sound like a simple concept, but far too many Americans are living above their means, which often requires leaning on their credit cards to make ends meet each month.
Setting a budget is often the most painful part of solid financial planning, because each family member might have to give up something they thoroughly enjoy. Dad might have to start taking his lunch to work every day, or his daughter may not be able to get those expensive new shoes for a while. Because of this, budgeting is also the step that many individuals fail to stick with.
But why give up now? By carefully monitoring your credit card spending, you can be one step closer to financial freedom, each and every day that passes.