Using Gift Cards to Stick to a Budget

Gift cards have become a multi-billion dollar business for the retail industry. We give them away as gifts for Christmas, birthdays, special occasions and employee rewards. It always seems that we are buying a gift card to give away to someone as a gift – but have you ever thought about buying one for yourself?

Before we get too caught up in gift cards though let’s take a moment to talk about budgets. We all say we are going to stick to a budget, but for many of us we never seem to quite achieve that goal. Thanks to our credit and debit cards we spend a few extra dollars here, buy a few extra trinkets there, and by the end of the month we’ve overspent ourselves by $200 and have no idea where the money went. So we start the whole cycle over again – next month we are going to do it! Maybe, sort of, well kind of.

I want to introduce you to a way to put your whole family on a budget and stick to it. It’s something that will not only let you stick to a set dollar amount, but can also be a powerful tool for teaching your entire family the value of money and how to manage their money without worrying about overdraft fees or over-limit fees on your credit cards. Best of all, it is free and is available at almost every retailer – gift cards.

Start out small. Next month for each member of your family sit down and make a budget for something small – say clothing. Assign each member of your family a dollar amount that they are allocated to spend on that item for the month. Then explain to them that they will be issued a gift card for that amount. They are free to spend all of it, or they can spend a portion of it. Whatever they don’t spend can be carried over to the next month – in this way if they want to make a major purchase they can by saving up for it.

Hey, guess what, you are also teaching the value of saving money – a bonus!

Now you may be concerned about how to do this without limiting them to one particular store. After all, not all of us want to buy our clothes from Kmart or JC Penney. No need to worry because now you can buy universal gift cards that are issued by the major credit card players – Visa and American Express. Many retailers sell them, or if you can’t find them check with your bank as they often sell them as well. These work the same as gift cards and are free to purchase. You put the dollar amount on the card and the card works up to the dollar amount on it.

Distribute the cards to your family and sit back and watch what happens. Of course some family members will attempt to spend more then they have, while others will save up. At the end of the month collect the cards and see how much they have left on them. Then refill them with their budget amount for the next month. If dad has $30 left, and his monthly budget is $100 then next month he’ll have $130, and so on.

Once you have tried this out for a few months look at other areas you can apply this too. How about the monthly grocery bill? Again, purchase a separate (this is important) card for grocery purchases and load it with the amount you budgeted for groceries every month. It can be a card from Kroger or Safeway, or again it can be a universal card – like another American Express gift card. Be sure to label the cards for their purpose. Don’t cheat! Don’t use the gift card for clothing or gas to pay for groceries, and vice versa.

This unique way of budgeting can finally help you choose a budget and stick to it. It will take some time at first to get used to the “new’ way of doing things, but after a while you will begin to see how the numbers add up – and see how you and your whole family can choose a budget and stick to it.