Gift cards come in handy for the holidays, birthdays and other celebrations. It makes shopping easy for the gift giver and allows the recipients to get what they want from their favorite stores. The NRF reports that gift cards from department stores, restaurants and coffee shops are the most popular for gift giving.
Gift cards are also practical and convenient to purchase. While they come in handy for special occasions, have you ever thought of using them to budget for everyday expenses? This can benefit those who tend to spend money in the wrong places when actual cash is used. This method can also help people who find themselves overspending when using credit cards. No matter how you choose to purchase them, you are locked into the designated amounts to guard against impulse buys or spending elsewhere when you shouldn’t. The only prerequisite is that you know how much you should be spending in each category and be sure to buy no-fee gift cards. Here are some tips to use gift cards for budgeting and stretching your dollars.
1. Take a look at you current budget.
Use each category amount to determine how much to spend for the month on variable expenses like groceries, personal care items, gas, entertainment, etc. Decide how often you want to purchase the amount allotted in gift cards. You might want to start biweekly and see how it goes. You can tweak the frequency if you find that you rather purchase the cards less often. Experiment to figure out a pacing that works best for you.
2. Start by purchasing plastic or digital gift cards to stores you go to on a regular basis.
Purchase the cards in advance to match your budget categories. Start with one area at a time. This will help stabilize your spending and help you budget more efficiently. No matter how much you purchase in advance, spend the amount allotted per week. So if you normally spend $600 a month on groceries, make sure you only spend $150 per week in a month with four weeks. Just be aware that some months are longer than others. Be sure to plan accordingly. You’ll have to spend less per week if the month is longer.
If you don’t mind purchasing physical cards, they might be a useful method to block you from overspending on a credit card. They can serve as a visual reminder in your wallet. It can trigger you to spend using those instead of your credit cards.
You can keep track of the balance by attaching the receipt to the card or putting the card back in a business card holder with the receipt. My daughter actually writes the amount on the back of the card in permanent marker to remember the balance. No matter what you decide, it will help you remember what you have left on the card. You can also budget digitally. You just have to remember your target number of what you can spend.
3. Make your dollars go further.
If you’re looking to not only stay within your limits but stretch the allotted amount in your categories a bit, challenge yourself to come under the gift card amount. Start by shaving off small amounts of money like $5 or so. Maybe put back items that you don’t truly have to buy this trip, You can free up cash in your budget and push the date you purchase them a little further out. If you find that you can stick to the new lower limit, you can reload a smaller amount of money and use the extra money in your budget for savings or getting out of debt.
If you find it hard to lock into one store, shop where the discounts are. If you like multiple stores and aren’t tied to one brand, look for the savings before you choose where to shop. For example, if you get a discounted gift card from sites like Gift Card Granny, Cardpool or Raise, you can get a discount before you even shop.
4. Take baby steps.
If you wait for sales, you can take advantage of deeper discounts just by being a little strategic. Gyft.com is another gift card site that allows users to reap rewards from their purchases with points. Points accumulated can be used towards future purchases.
Start small with one area of your budget, like the grocery store. This way you can experiment with a routine that works well for you and your habits. Once you get a process down, you can apply the same steps to another store like pharmacies you frequent or big box stores like Walmart.
Gift cards are a popular way to give a gift for a special occasion. Consider using them on a regular basis to keep your spending on track. You can also potentially stretch your spending dollars with the tips mentioned above.