Society & Lifestyle

The best payment types for sticking to a budget

Ann Lloyd 



In today’s world, budgeting is an essential tool to ensure your short-term financial security and reach your long-term goals. From day-to-day expenses to saving for the future, a good budgeting strategy also has to fit seamlessly into your lifestyle.

That’s why it’s important to consider how you spend your money, in addition to how much. When choosing what payment method you’ll use to pay your bills, where you’ll store your savings, and how to keep track of it all, consider the following tips.


The best payment types for sticking to a budget. Source:

Cash: king or forgotten?

Conducting your finances in cash can offer you total control over your money. There are no hidden fees or monthly maintenance requirements like with credit cards. And, you can easily keep cash in a safe at home, giving you peace of mind.

With that said, cash usage is disappearing. By 2024, less than 13% of in-store payments will involve cash. The pandemic has had a significant impact on that statistic, including both the inaccessibility of in-store purchases during lockdowns and the rise of mobile payment options. It is a trend unlikely to change. With that said, as cash becomes a less likely payment option, you may find yourself holding onto it longer.

If stores aren’t readily accepting cash, you can’t spend it easily, especially on unneeded or impulse purchases. While you’ll need a banking account for required payments, keeping most of your funds as cash can help curb spending in a world moving away from paper currency.

How smart is credit?

Credit cards are often not the first thought we have when it comes to payments. Using credit cards to pay for items introduces a middleman that often includes fees and the potential for abuse. However, with proper planning and education, one can comfortably use credit cards for payments. Doing so comes with attractive benefits, including point accumulation and cashback offers.

Using a credit card to make your monthly payments is also a great way to build your credit. Having a high credit score is also all but required for many aspects of life. Not only will your eligibility for future loans depend on your credit, building better credit can save you close to $22,000 over the life of a 30-year mortgage. If you have dreams of starting your own business, your credit will help secure capital loans as well.

However, if you don’t have the funds to cover your purchases, you’re only hurting yourself. If you use a credit card for payments, be sure to pay your balance in full each month to avoid interest charges. You are responsible for paying the minimum monthly payments on your credit card bill, but that will not be enough. Use the credit card as a tool to build your credit, not as a stopgap for lack of funds.

There’s an app for that

Let’s be real. It’s difficult to pay for everything with a single payment method. Utility companies don’t always accept credit, and paying your mortgage in cash every month can be difficult.

Fortunately, technology can help. Budgeting apps allow you to have your finances directly at your fingertips. These apps can connect directly with your accounts, allowing you real-time insight through easy-to-read infographics. Most also provide educational tools to help boost your budgeting behaviors.

Though these apps don’t necessarily handle outgoing payments, they allow you to track and organize recurring payments into categories. You can set spending limits for each category and create tangible savings goals that will help you keep spending down.

Never neglect the emergency fund

The unexpected is precisely that: never expected. That doesn’t mean you shouldn’t prepare for the unforeseen. Your monthly budget should always include deposits to an emergency fund. And it’s important to keep this money separate from your regular spending accounts, like in an account at a different bank. Then you won’t be tempted to use the funds for anything other than emergencies.

Surprise car maintenance, medical emergencies, and home repairs can easily bottom out a budget if you’re not prepared. (Did you know it can cost up to $1,800 to replace a single window in your house?) But if you have a separate emergency fund, you can take care of unexpected expenses and keep your budget in tact.

If you think you don’t make enough to begin an emergency fund, set aside a dollar a day. That’s $365 in a year — roughly the cost of a new set of tires. When it comes to keeping your budget sound and your savings on track, every cent counts.

Even if you have achieved your financial goals, budgeting is an important tool in your arsenal. The unexpected will always happen, and having the proper tools and resources at hand will mitigate stress and turmoil. Ensuring that your payment habits are sound is one of the first steps in establishing a beneficial budget. Whether you rely on a debit card or you control everything from apps and mobile banking, your payments should reflect what is best for your budget and yourself.


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