When I had dug myself into a financial pickle, I read advice articles from financial experts on breaking the cycle of credit card debt and the importance of relying solely on cash. Dutifully, I created a detailed budget and followed the envelope method. I labeled each envelope with its budget category and put in just enough cash to cover what I allotted for the week. I felt very mature and virtuous and convinced I was on the path to financial success.
Except I found out pretty quickly that the envelope method was pretty much the worst technique possible for me. Keeping that much cash on hand made me nervous, and because it was so strict, I couldn’t take advantage of great bargains at the grocery store. If they had a sale on a family-size pasta sauce that would last for several meals, but would take me over my food budget for that week, I would have to pass and buy the much more expensive-per-ounce, smaller can instead.
And I missed my plastic; no matter how many experts compare credit cards to the devil, credit cards can be pretty darn useful — and profitable. No fee cards used on routine expenses like gas, grocery trips and pharmacy runs used to give me nice cash-back rewards and by switching to real money, I was losing out on those bonuses.
There had to be a better way. And I ended up finding out that using credit cards is the best way for me to manage my finances.
Why Credit Cards Are Awesome
Using credit cards to budget your money is a great idea for a lot of reasons. Using credit cards responsibly helps you build a good credit score and a strong credit history. You can get significant cash bonuses and, most importantly, credit cards can be an incredibly powerful budgeting tool.