Yesterday I outlined the various tools you can use to track your budget. At the end of the article I mentioned how our credit card simplified the budget and I wanted to elaborate on that a bit more. Not everyone takes debit cards so there were times when we would have to pay cash for something (e.g ordering take-out). Then there would be times when there weren’t enough funds in our chequing account for a debit transaction at the grocery (see my article Optimize your Bank Interest through Automation as to why). My fiance and I would pay with cash from our personal accounts when these events occurred. We would then either take the money we were owed from our joint account or when we moved our individual share of the bill money to our joint accounts we would deducted the money owed to us. This became a nightmare to track MS Money.
Why was it so difficult to track in MS Money?
I don’t like to enter in transactions manually. I love that all of the transaction in MS Money correlate exactly with a transaction on our bank statements. This makes finding discrepancies simple. This all goes to hell when you start dealing with cash especially when the cash amount withdrawn from our joint account is to cover multiple cash transactions. I was working around this by splitting the transactions that were downloaded to MS money. I did this so that visually the transaction aligns with my bank statement but portions of the single a transaction got placed into the correct spending categories so that my budget got updated correctly. Every time I did this I never seem to do it exactly the same way and my spending categories weren’t starting to balance correctly in MS Money.
How did our credit card help?
We no longer had to make sure there were funds in our chequing account to cover our variable expenses, we could also order items online, or we could order take-out food since everything was going on our credit card. This virtually eliminated the need to monitor messy cash transactions. All transactions were recorded on our credit card bill which we download to MS money. This made balancing all of out spending categories simple and the reports we generated are no longer skewed by the cash transactions. I now had my one to one transaction correlation between my bank statements and MS Money.
Isn’t it dangerous to use a credit card?
A credit card is like any other tool, in the right hands it simplifies life, in the wrong hands it can cause a lot of damage. As long as you update your budget weekly you’ll be able to stay on top of your credit card spending. If you find yourself constantly going over your budget then go back to manually tracking your transactions until you develop some more self control because a credit card is not your budgets best friend in this case.
Do you use a credit card to simplify your budget? Has it ever gotten out of control?
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