Budgeting With Prepaid Cards

Prepaid cards for services may include a bonus or discount for purchasing.

You can use prepaid cards to budget spending and encourage saving. Prepaid cards allow the owner to move money into a separate account and monitor the expenditures from the connected card. Cards are available for wireless and ground-line phone communications, travel, entertainment and general purchasing. Some prepaid cards offer programs to improve the credit of the card holder as they spend within their limits. Improve your financial situation by using prepaid cards to budget the money you spend.

Instructions

1. Total your monthly income. Subtract every reoccurring monthly expense that is mandatory and cannot be paid on a prepaid card. Mandatory expenses are things like your mortgage, rent or car payment.

2. Divide the remaining income between all the other expenses you expect for the month that can be covered by prepaid cards. Prepaid cards are available for movies, restaurants, retail shopping, even public transportation and grocery stores. Set value limits for each category.

3. Visit retailers in person or online to purchase prepaid cards or set up an account. Some prepaid card retailers only offer cards in select denominations which may require that you buy more than one card. Prepaid cards may also offer direct deposit programs that allow you to automatically transfer money from a paycheck onto the card.

4. Limit spending for the month to the amount on the prepaid card. Check balances online or at the retailer to determine the remaining balance on the card and plan accordingly. Avoid adding money to the prepaid card or paying for a service with cash or credit when you have already drained the budgeted funds for the month.

5. Redraw the budget guidelines every few months as costs and income change. Move a little money each month to a prepaid airline or hotel card to budget for future vacations.

Tips & Warnings

• Reduce the amount you put on the card the following month if you overestimated the need and left a large sum from the prior month.

• Read the rules of the prepaid cards you save on carefully to make sure they do not expire if they are not used for an extended period.

References

• This is Money: Can Prepaid Cards Help Students Budget?
• Prepaid Cards 1,2,3: 7 Ways Prepaid Cards can Help You Budget