I was driving home one day and remembered I had received a Target gift card for Christmas from a family friend. My mind started to fill with the many ways I could spend that money on snacks, drinks, and other frivolous things. I then started thinking about how much money I waste at Target buying things that I really don’t need. It then occurred to me that if I bought a 50$ gift certificate to Target at the beginning of each month and only used that to buy things at Target, I would limit my wasteful spending to 50$. I went home that night and looked into it a bit and learned that I wasn’t the only one that knew about gift card budgeting.

What Are The Benefits Of Gift Card Budgeting?
Gift card budgeting is great because it forces you to spend only a certain amount of money. Other budgeting strategies involve a lot of tedious receipt tracking and self discipline. If you use gift cards to manage your budget, you know just how much money you have in your budget to buy the things you need. Once your gift card is spent, you’re spending is cut and you’ll have to wait. Sure you can cheat and spend more, but at least you’ll know you’re exceeding your budget at the very moment you’re making a purchase. So the first benefit of gift card budgeting is that it helps keep track of your spending much easier.

Gift card budgeting is also beneficial because it makes you do all of your spending at the beginning of the month. If you’re someone who blindly spends all month and ends up with mountains of bills, you’re going about it the backwards. If you spend your money at the beginning of the month, you’ll be able to better forecast whether or not you’ll have enough money for the rest of the month. It may seem counter intuitive to spend your money first because it’s like loaning your money for a month interest free, but if you buy your gift cards on your credit card, you actually can wait to pay for the gift cards until your credit card bill is due. This leads to the next benefit of gift card budgeting.

The third and final benefit of gift card budgeting is that it allows you to get the same rewards from your credit card if you purchase the gift cards with your credit card. Although credit card rewards are very small in comparison to the money you spend, they do still help.

Who Is Gift Card Budgeting Good For?
Gift card budgeting is good for anyone who wastes a lot of money at certain stores. For me, it was Target. I would go in there meaning to buy only a few things, and come out spending more than I planned to. Maybe you have an addiction to gourmet coffee drinks or fast food burgers. Whatever it may be, using gift cards can help you curb your frivolous spending and stay within your budget.

Some Helpful Tips
If you’re thinking about getting started with gift card budgeting, here are a few quick tips. The first tip is to follow a monthly schedule. Trying to do it on a weekly or bimonthly schedule, you’ll have either too much or too little time ahead of you to plan your spending. Sticking with a monthly schedule will be easier on you and will fall into sync with the rest of your monthly bills. This will make it easier to get onto this budgeting path.

The next tip is to make sure you budget intelligently. Go back and look at your spending in months previous and figure out what would be a realistic spending goal to achieve. At first, you might want to take it a little easier so you can be successful your first month. Starting out with a little success and satisfaction from budgeting your money is the only thing that will keep you going, because otherwise it just feels like work.

The final tip is to use reloadable prepaid cards to spend at multiple places while keeping within a budget. These types of cards are offered by most large credit card companies and don’t even require any credit check because you pay the money before you can use the card. If you shop at many different stores, this would be a good way to lump all of your spending under just one card, and have a few other gift cards specifically for stores you visit very frequently.