What you need to know About Spending your Money Smarter in 2023
Updated: Mar 5
Money management is an important part of achieving financial success. People often look for ways to make their money work harder and smarter, so they can have more money to enjoy the things they love, like travel, dining out, or luxury goods.
Structuring your money properly, staying committed to saving, and using the right credit cards for specific purchases are great ways to make your dollar stretch a little further while building a strong financial footing.
With responsible use, a credit card can help you maximize the benefits of each transaction by offering reward points or cash back on nonnegotiable purchases like gas, groceries, and other household expenses.
By regularly monitoring transactions on your account and making payments on time, you can ensure that your spending is wise and within budget. Maintaining an open line of credit in good standing is also the fastest way to build your credit score.
In this article, we offer recommendations for which credit cards will give you the best rewards for regular purchases.
Maximize the benefits of your spending
Housing, transportation and insurance, household expenses, and groceries are the four largest spending categories for the majority of our adult lives. Managing how we spend money in these categories and taking advantage of available rewards could mean tens of thousands of dollars in savings over our lifetime.
The best part is you won't have to clip a single coupon.
One thing you can do right now without making any drastic lifestyle changes is to evaluate how you're paying these bills. If you follow any common budgeting trends like envelope stuffing promoted by longtime money writer Dave Ramsey, it may be time to give your system an update.
This methodology has worked for thousands of people, but it does have some drawbacks for the modern buyer. By paying with cash, you miss out on hundreds of dollars every year in cashback rewards or points by using a credit card. There is also the risk of losing the cash and the hassle of digging through your purse or wallet for exact change.
Instead of carrying around envelopes, apply the same method to your credit cards. Have credit cards designated for specific purchases based on the rewards given and use a freeze feature when the spending limit has been hit for that month.
That way, you still have controls and protection against overspending, and you reap the rewards and benefits of the card. You can also set up an automatic payment from your bank each month, so you'll never have to worry about accruing exorbitant credit card interest. Sound interesting? If so, you're probably wondering which cards are best to use.
Three credit card Recommendations for Everyday Expenses
I know credit cards can be an overwhelming temptation and lead to a lot of overspending. However, there are so many tools available now that help keep spending in check that it's difficult to overlook the value they bring to your overall financial situation.
Between the additional cashback or rewards savings and the boost to your credit score when paid off regularly, there's really no reason not to use credit cards unless the ones if your wallet aren't offering any benefits.
Below I've listed three cards that offer a solid bang for the buck. Do you have any of these already, or do you know of any others that have been beneficial to you? Leave a comment. I'd love to know!
Amex Blue Card - The Ultimate Grocery Getter
I love this card because it offers one of the highest, if not the highest, return on grocery purchases. Looking at the U.S. Report on average grocery spending, a family of four with a moderate to liberal monthly budget could expect to save close to $1,000 annually.
I also like some of the other features American Express offers, like purchase protection or early access to entertainment events like concert tickets and more.
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Pro:
6% back on Groceries
2% back on Gas
No rotating Categories
Additional Member benefits and savings
Con:
Has an annual Fee after the first year
Requires relatively high credit for approval
Some Superstores that offer groceries may be excluded i.e. Walmart, Target etc.
Chase Amazon Rewards Visa - For the Busy Online Shopper
If you rely on convenience or a set-it-and-forget-it methodology stacking additional savings from subscribe and save purchases with the 5% return on amazon purchases is a tough deal to beat. Plus, you're saving on gas and vehicle wear and tear by having your items delivered. I can say the rewards points add up pretty quickly with this card.
Visit Chase to Apply
Pro:
5% back on all Amazon and Whole Foods spending
Applies to Subscribe and Safe Offers
Redeem points as a statement credit or toward additional amazon purchases
No Annual Fee
Con:
Few additional features or benefits beyond amazon shopping
Target Red Card by Mastercard - For The Weekend Errand Run
It's the app for me. I love the contactless payment options and the ability to add coupons to my digital wallet while I shop by scanning item barcodes. The Target Circle app runs various sales and discounts on everyday items.
Pro:
Instant 5% savings on top of Target Circle savings and any manufacturer coupons
5% off applies to In-store Starbucks purchases and specialty gift cards
No Annual Fee
Free 2-day shipping
2% on Dining & Gas 1% on everything else
Multiple Card Options (Credit, Debit, Reloadable)
Bonus Tip: wait to sign up until bonus offers are running like $40 towards your next purchase or an additional percentage off your bill.
Con:
Target stores can often be too far away for convenient in-person shopping
Things to Consider when Selecting the Best Cards to use
Rotating reward categories, reward redemption limits, and fees can quickly undermine your efforts. Rotating reward categories is probably the most frustrating and can require a lot of work to keep up with. Maximizing your rewards earned quickly becomes more hassle than its worth.
Another common catch is limitations on how and when you can redeem your rewards. Reading the fine print or searching for card user reviews is a good way to determine if this may be an issue for you moving forward.
The last drawback to consider is any costs associated with maintaining your card, like an annual fee. Sometimes the benefits will outweigh the fee, but it's important to factor it in when looking at the overall benefit.
Even though the American Express Blue Card has an annual fee after the first year, I still recommend this card for groceries and gas because a single person with a modest budget can find value beyond the cost of this card
when managed properly.
The Wrap Up
In summary, using credit cards can be an effective way of managing your spending and earning rewards or cashback. It is important to select the right card for you based on your needs and budget. But always remember to shop responsibly and pay off your card every month to avoid accruing expensive credit card interest. If you struggle to stay on top of your spending, I highly recommend checking out the Mint App that is covered in our 5 Essential Apps for 2023 article. Hopefully, you discovered something new that will make a positive impact on your spending this year.