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Pursuing credit card rewards can be a delicate balancing act and, in some ways, we’re almost set up to fail. If you really think about it, the gist of this hobby is fairly strange and almost predatory.
They dole out rewards in exchange for our spending, leaving the responsibility of avoiding debt up to us. And if we do slip up and fail to pay our balances in full, we’re hit with interest rates as high as 24 percent.
Ouch.
The key to benefiting from rewards is pursuing them in a way that doesn’t jeopardize your other financial goals. If you ever find yourself buying a new television because the Chase portal is offering 4x points at BestBuy.com, for example, you should ditch this hobby right away.
Personally, I’ve found that using a budget helps us stay on track. Every month, we create a written budget that accounts for our regular bills and spending. In it, we include fixed expenses like our mortgage, insurance payments, childcare, and gymnastics lessons for our kids. We also include estimated expenses like utility bills and food. Then we add it all up and compare it to our income.
Here’s how using a budget helps us avoid overspending to earn more rewards:
#1: If it’s not in the budget, we don’t buy it.
That new television I just referenced? I’m not against buying one, but I’ll never do it on an impulse. If something we want isn’t in our monthly budget, we don’t buy it – rewards or not.
If we want it bad enough, we have to wait and put it into the next month’s written budget. By the time the next month rolls around, we usually forget.
This means we don’t get a lot of “new stuff.” But it also means we don’t waste money on things we don’t need.
#2: Planning our spending in each category helps us remain frugal.
I like planning out our spending in each budget category. It’s easier to stay on track that way. We schedule $600 to spend on food every month, and without that limit, I could easily spend $2,000.
What can I say? I don’t mind cooking, but I would prefer to eat at Benihana every night.
But, my finances don’t love the expense. Fortunately, my $600 monthly food budget forces us to cook at home and avoid pricey restaurants.
#3: Budgeting forces us to prioritize our spending.
Using a budget forces us to prioritize everything in our lives, from how much money we spend on food to how much we save for travel.
When you don’t use a budget, life happens. But, when you write all your money goals down, they come together a lot easier.
#4: Budgeting helps us grow our travel budget.
This last part is important, mostly because all travel is not free. We easily spend $10,000 or more on travel each year, and that’s on top of the points and miles we burn.
Since we’re budgeting our money each month, we budget for savings, too. And we absolutely set aside cash for our travel budget every month. So, as our point balances grow, so does our savings.
Remember, anyone who says travel is “free” is lying. It costs money, no matter how many miles you have.
Final Thoughts
If you want to take advantage of this hobby without all the pitfalls, it helps to have a written budget! A budget can help you prioritize your spending while planning for the things you really want in life.
And despite what anyone says, budgeting doesn’t have to be painful or restrictive. In a lot of ways, it’s the best way to get what you want out of life.
Do you use a written budget? Why or why not?
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Delta® Reserve for Business
- Annual Fee: $450 fee
- Foreign Fees: No
- Card Type: Travel
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- Earn 40,000 bonus miles and 10,000 MQMs after you spend $3,000 in purchases with your new Card in the first 3 months.†
- Earn 15,000 Medallion® Qualification Miles (MQMs) and 15,000 bonus miles after you reach $30,000 in eligible purchases on your Card in the calendar year.
- Earn 2 Miles per dollar spent on eligible purchases made directly with Delta. Earn 1 mile on every eligible dollar spent on purchases.
- Settle into your seat sooner with Priority Boarding and enjoy 20% savings on eligible in-flight purchases in the form of a statement credit.
- Pay no foreign transaction fees when you spend overseas.‡
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- Terms and limitations apply
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Delta® Reserve for Business
- Annual Fee: $450 fee
- Foreign Fees: No
- Card Type: Travel
| FTG Review | Reward Breakdown | Points Breakdown |
|---|---|---|
Breakdown
Earn (pt.)
Spend
3 months
0
$3,000
Per dollar on eligible purchases with Delta Purchases
2.00
$1
All Purchases
1.00
$1
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