December 30, 2020

Sticking to a budget isn’t always easy, and plenty of adults look for things that can help. Different apps, payment types, and cards may help you sort through the different methods and find the budgeting approach that you can stick to.

Automatic Payments through ACH

ACH stands for Automatic Clearing House. It allows for financial transfers from one account to another. If you’ve ever had your paycheck direct deposited, you’ve used ACH. ACH can also allow you to pay your bills online through a secure online portal. You enter your information securely, set up one-time or recurring payments, and ACH will take care of moving the money on the date you set.

This is an excellent option if you are someone who may forget to pay bills, especially if you have bills with different due dates. Setting up automatic monthly payments will make sure that everything is paid automatically from your checking account. If you have a budget and you know the money will be in your account, this is great. The only concern is if you spend the money in your checking account without thinking of your automatic payments. ACH transfers from an account that can’t cover the withdrawals will cost you plenty in overdraft and returned payment fees.

Using PayPal, Zelle, and Venmo for Payments

PayPal, Zelle, and Venmo are P2P, or person-to-person payments. Zelle and Venmo don’t charge a fee to transfer money between users, which makes them great for individuals that you need to pay. While this is great for paying friends back for expenses, it can work well for your budget as well. Babysitters, lawn service, house cleaning, tutors, and more can be paid electronically without having to rely on cash. Using these methods can help you stick to your budget by giving you a record of exactly who you are paying and for what, rather than relying on cash.

Credit Cards Vs. Debit Cards

Credit cards can be dangerous, and most of us know that. However, when used intelligently, they can not only help you stick to a budget but reward you for doing so. If you are a disciplined card user who keeps an eye on your balance and pays it in full every month, having some bills automatically charge your credit card can earn you rewards in the form of gift cards, travel, or even cash back. However, if you do not pay your balance in full, this is not a good idea. In general, when trying to stick to a budget, using a debit card or cash is the best way to keep from overspending. When the money’s gone, it’s gone, and you won’t be taking a high-interest loan from the credit card company. Your budgeting methods will guide you toward which card is smarter for you to use.

Old School Methods

For some people, old school methods will work best. Rather than relying on electronic payments, you will use checks to pay the bills and cash for everything else. Once your cash is gone, there would be no more spending until your next pay day. Many people have success with this “envelope system”. They pay their bills with checks, then write down the remaining dollar amounts for the other budget categories (food, entertainment, clothing) and put the cash in those envelopes. You can only spend what is in the envelope. This method works well for those who really need to “see” how much money they are working with.

How These Payment Types Fit into Budgeting Methods

Budgeting methods need to fit you and your lifestyle. If a budgeting method doesn’t fit you, it won’t be successful. Beginning a budget may take some trial and error before you figure out which method will work best for you. Some people need to go electronic to take any potential user error out. Others like the control that old school methods provide.

The most important thing about any budgeting method is that you know where your money is going, you are allocating money to savings each month, and you use your budget to keep you from spending more than you bring in. It can be overwhelming to get started, but with the right plan and the right help, it is very attainable. Contact Safe Money Partners for more information about successful money management and how you really can live debt free.

photo of Jeff Mohlman

By Jeff Mohlman

Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.