These Payment Types Can Help You Stick To A Budget

which payment type can help you stick to a budget

Ask yourself: which payment type works best for you overall? In terms of convenience and keeping financial data organized, the most efficient payment methods are usually debit cards, cash, or cash-based payments. In addition, developing a reliable budgeting strategy will help you avoid financial disaster when deciding which payment type can help you stick to a budget.

Here’s a look at how cash-based payments compare with other options such as credit cards.

Why It’s Difficult For People To Stick To A Budget

what payment type can help you stick to a budget and why it's hard

Certain forward-thinking individuals pay close attention to budgets, while many consumers don’t put any effort into it. For the everyday shopper with credit cards, it’s easier and more exciting to go on shopping sprees than to worry about counting cash. But developing self-discipline for planning a budget is essential.

Budget cuts are usually part of a successful financial journey based on tight money goals. 

Lowering monthly expenses begins with cutting discretionary costs, which often means trimming the entertainment budget. Eating out less and driving less are also important steps to significant budget cutting. But many people are too busy having fun running up bills to compensate for rising stress about needing more money. 

Drowning financially from credit card debt to student loan debt has been the norm for millions of consumers since the 2008 financial meltdown. The collapse generally affected the middle class on down and wiped out many retirement savings accounts.

Since then, it’s been difficult for the typical American family to put away money in traditional savings accounts. 

Payment Methods That Make It Hard To Stick To A Budget

payment methods difficult to budget

Here we list the payment methods that cause people the most problems when they try to stick to their monthly budget.

Payment System 1: Credit Cards

Credit cards don’t work well for budgeting because the credit limit is the primary restraint to avoid overspending. When people have credit lines in the thousands of dollars, they often develop a false sense of security. Falling into a debt spiral is easy once you use a credit card regularly, like grocery shopping.

Payment System 2: Personal Loans

Taking out a personal loan just to ensure you have spending cash may also disrupt budgeting. Many consumers can’t handle seeing a low checking account balance, so they borrow money to tell themselves they’re in a better financial position. Unfortunately, this escapist thinking usually leads to deeper debt. 

Payment System 3: Cryptocurrency

Bitcoin and other cryptocurrencies are still in their infancy as they have gained massive media attention in recent years. It’s unclear if this payment method is headed for strict regulation or not. The main challenge this system poses is most organizations have yet to accept cryptocurrency for payment.

What Payment Type Is Best For Sticking To A Budget?

these are the best payment types to help stick to a budget

Financial experts often point to debit cards as the best payment method for maintaining a personal budget. Debit cards should be considered a top priority for budgeting because they keep you within your spending limits.

Since a debit card is usually linked to an online account, it’s a seamless solution for tracking your monthly payments. Your debt payments will appear on your computer screen, which you can monitor anytime from any location. 

By keeping spending within your debit/checking account, you’ll avoid overspending that leads to out-of-control debt. One of the worst consequences of debt can be that it lowers your credit score, making it more difficult to borrow. So setting up automatic savings that draw from your debit account each month is another financial safety net to consider. 

Convenient Payment Methods For Budgeting

These are some of the most convenient and effective ways to help you decide which payment type can help you stick to a budget.

Payment System 1: Cash

Paper money can still be convenient for making payments in person. But it’s usually never a good idea to send cash in the mail. First, you don’t know who is going to open the mail. Second, if your sources of income are all paid in cash, you need to be careful where you physically store it. 

If you’re interested in a cash envelope system, check out my related post here:

Payment System 2: PayPal and Similar Sites

PayPal has attracted various competitors in recent years like Payoneer and Stripe. These digital transaction services allow for easy instant digital payments online. PayPal also issues debit cards.

Payment System 3: Mobile Wallets and Apple Pay

These forms of digital payment make it easy to pay for items instantly with your smartphone. They are very convenient for paying a department store in person. 

Payment System 4: Write a Check

Traditional checks are still payment options in many places. Now that the world has gone digital, you need to take the extra step to make a digital and physical record of the check. Saving check stubs is helpful, but you still need to transfer the information to a budgeting system. 

Payment System 5: Money Order

One key advantage to paying with a money order is that it’s more secure than cash. It also doesn’t require a bank to make a transaction. Thus, it’s an effective, low-cost way to guarantee payment to the recipient. But money orders aren’t that convenient since they must be purchased in person. 

Payment System 6: Money Market Account

On the surface, money market accounts are attractive because they earn interest. They can be used for investments and emergency funds. Some financial institutions allow customers to write checks with these accounts or pay bills digitally. 

A money market account is a savings account that pays higher rates than regular savings accounts. The best way to earn money from these accounts is to keep them for at least 90 days. If you don’t use the money for anything else, then you should be able to earn 1% or more per month.

Payment System 7: ACH Payments

Automated Clearing House (ACH) payments are like direct deposits. These systems utilize checking account information to make an automatic transfer on a specified date. In addition, it helps set up automated monthly payments. With autopay, you must pay attention to your check account balances to avoid paying overdraft fees due to insufficient funds.

Using Cash To Stick To Your Budget

Cash is an excellent payment type when your financial goals are to reduce debt spending. You have a set amount of money to play with, so there’s no chance of overspending. The diversity of cash can be used to pay medical bills, gym membership, groceries, or whatever else you fit into your monthly budget. 

Using A Debit Card To Stick To Your Budget

Your debit card is like an electronic ticket to financial freedom with responsibility. While student loans have limited young people’s ability to save money in their bank accounts, a workable solution is to stop borrowing and start saving money.

Once your debt is in the thousands of dollars, you’ve got to switch to stricter budgeting. Using just a debit card for everyday expenses as well as unexpected costs helps you achieve realistic goals. 

Using A Credit Card To Stick To Your Budget

credit card payment method to stick to your budget

Much like money from a personal loan, using your credit card as a standard payment method can work if you’re careful with costs. But it probably will just run up debt if you can’t control impulsive spending habits. So instead, think about joining a credit union that offers a collateral account, which involves borrowing against your own capital base. 

Choosing A Budgeting System

An essential prerequisite for choosing the right budgeting system with a sensible spending plan is to put expenses into categories. For example, your discretionary expenses should be in a variable budget category that fluctuates depending on whether you earn extra money. In addition, your payment method should be a routine that repeats on a regular basis. 

Be sure to steer clear of payday loans for paying bills unless you know you can repay them quickly. These loans are helpful for emergencies but can become very expensive if you don’t pay them off in a matter of weeks. 

Different Budgeting Systems

 Here are various budgeting methods used for both personal and commercial bookkeeping: 

Budget System 1: Incremental

This form of budgeting is based on the previous year’s financial figures. Adding or subtracting an appropriate percentage helps determine the following year’s budget. It’s the most widely used form of budgeting due to its simplicity. 

Budget System 2: Activity-based

The user or commercial entity researches the activity needed to meet financial goals. When you know exactly what your monthly expenses will be, you can make an automatic deduction when it’s convenient. 

Budget System 3: Value proposition

The business or individual must question all budget amounts, whether the benefits outweigh the costs. If a credit card statement seems incorrect, it’s essential to contact the firm and resolve the issue immediately. These days credit card theft is more common than just a decade ago. 

Budget System 4: Zero-based

This form of budgeting is used more in retail. It presumes that budgets start at zero and must be built from the ground up. All expenses must be justified.

Creating A Budget:

top budget categories to create your budget

Creating a monthly budget is easier than you think. Follow these simple steps to take control of your money once and for all.

If you need a budget template, check out my free budget template here.

1. Goals

Some of the most common budgeting goals are to get out of debt and to make purchases within your means. Be aware of rising living expenses, which may mean cutting discretionary spending more than you did last year. Setting a savings goal will help drive you toward more efficient spending.

2. Income and Expenses

Part of budgeting requires you to locate and list income and expenses. Make sure you are able to at least make each minimum payment every month. It’s beneficial, however, to pay more than the minimum requirement to reduce the amount of interest you pay in the long run. 

3. Building a Budget

A basic budget begins with reviewing and categorizing your needs and desires. Stay focused on a realistic budget while preserving your assets.

4. Tracking Expenses

Knowing how to track purchases is essential to move ahead financially. Be clear on your most significant expenses and evaluate the importance of each item to justify future purchases. Keep a list of your monthly costs in a place that’s easy to find. Then, be sure to review it every month to ensure the list is current.

5. End of the Month Progress

It’s crucial to evaluate the previous month and how well or poorly you did as part of the budgeting process. Saying no to impulse buys and addictive financial habits is an encouraging step toward financial stability and meeting short-term goals. 

6. Staying Motivated

staying motivated when creating a budget

Budgeting tips to stay motivated:

  • Tip 1 – Set short-term and long-term goals that will make you happy while aiming for an amazing achievement. Allow a category for variable expenses so that you still have disposable fun money each month.
  • Tip 2 – Keep your goal within the realm of possibility. Don’t aim for something that’s too big of a challenge. 
  • Tip 3 – Remind yourself each day of your journey toward your goal about your progress.
  • Tip 4 – Write down your goal in your notes and on your calendar.
  • Tip 5 – Create your own benchmarks for steps toward your goals. 
  • Tip 6 – Think about working with an accountability partner. A financial adviser or career mentor can provide inspiration and valuable insights on your journey. 


The seeds to planting a successful budget begin with self-determination. You will achieve a balanced budget by paying close attention to budget amounts and costs for each purchase. Planning ahead is at the foundation of financial success, whereas draining cash without planning usually leads to debt.

If your budget breakdown makes sense and you focus on your goals, chances improve enormously for you to take control of your finances.