damircudic / E+ / Getty Images

How to create a budget, stick to it and save using apps and card rewards

During times of change, such as the coronavirus crisis, having a budget is absolutely essential. Here's how to do it


If you want to create a budget, start by breaking down your expenses into four major categories. Then use apps and online tools to stick to your budget and save. Here’s how.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Household budgets – or spending plans, if you prefer – are important in the best of times.

Without some sort of budget, you’re flying blind, hoping everything works out somehow. With a budget, you know how much you can afford to spend, and how you’re going to pay your bills every month.

During times of change, such as the coronavirus crisis, having a budget is absolutely essential. If you don’t have a budget and you keep spending at your usual rate, for example, you may not make ends meet, or you may not make the best decisions. If you have an old budget, it’s useless if it doesn’t reflect changes to your income and expenses.

Many people resist making a budget because it sounds complicated, or they’re afraid a budget is going to tell them exactly how to spend every dime. They may think creating a household budget is complicated or restrictive. The truth? It doesn’t have to be.

You can make a budget as simple or complex as you want. And you have more tools than ever to help keep on track.

Today, you can rely on credit cards, rewards points, shopping portals, budgeting apps and online coupons to not only create a budget but to save money and earn bonus dollars. That can help you meet your savings goals and staying under your spending limits.

With today’s tech and tools, there really is no excuse not to make a budget, and keep it up to date as circumstances change.

See related: How to create a budget that works for you

Start with your income

Your income is the most important category in your budget. Until you estimate how much you can spend, it’s impossible to make a budget you know will be successful.

For many people, the coronavirus has changed their income level – for better or worse. If you work in an essential industry, such as healthcare, you may be working as much or more than ever. Workers in “nonessential” industries may be laid off, and some businesses have closed. Employees who relied largely on tips, such as restaurant workers, are especially hard hit.

List the sources of income you expect to have during the coronavirus crisis, including:

  • Monthly salary or wages. Adjust for any change in hours you expect.
  • Retirement income. Include pensions, Social Security benefits and regular withdrawals from retirement accounts.
  • Unemployment income. You can go to your state unemployment website and estimate your unemployment benefits.
  • Other government payments. For example, the new coronavirus stimulus package includes checks of up to $1,200 or $2,400 for individuals and married couples, an advance tax credit and additional help to unemployed individuals. If you have a small business, you may qualify for an SBA loan.
  • Other income. Include income such as freelance income, rental income or money from a legal settlement.

See related: Coronavirus: What to do if you’re unemployed and have credit card debt

Break your expenses into the ‘big four’ categories

One way to simplify making a budget and help you remember all your expenses is to break your monthly expenses into major groups. Think in terms of these “big four” expense categories:

1. Housing

Most people’s housing expenses remain the same during times of change, such as the coronavirus crisis. You still pay monthly rent if you’re renting, or your mortgage payment if you own a home.

Housing expense includes your monthly utility bills, and any regular maintenance expenses.

The housing category should also include expenses you don’t pay every month, such as property taxes and home insurance, if they are not already included in your mortgage payment. If you are renting, don’t forget renters’ insurance. Divide the amount you pay annually by 12 to find your monthly expense amount.

2. Transportation

If you have a car, you know the amount of your monthly car payment. You also need to know how much your auto insurance costs per month, and the amount you spend to fill up your car’s tank.

Whether or not you own a car, your transportation expenses should include your expenses to take public transportation or taxis and ride-sharing services.

If you are working from home or “sheltering in place,” transportation is one expense category that should go down during the crisis.

3. Food

For some people who loved to eat at restaurants, but now are forced to eat all their meals at home, their total food budget may have changed drastically. They might spend more money on cooking at home, for example, and perhaps nothing on dining out.

Estimate what you spend at the grocery store and at restaurants or for takeout each week. Use that figure to estimate what you spend during an average month.

4. Non-mortgage debt

Include student loan payments, the amount you pay on credit card debt and any other debt payments you make in this category.

See related: How many credit cards is too many?

Calculate other miscellaneous expenses

The big four categories cover much of your expenses. But don’t forget other expenses, some of which can be significant, such as:

  • Child care
  • Cable bill
  • Cellphone bill
  • Entertainment
  • Gym memberships
  • Health insurance and medical expenses
  • Other insurance, such as life insurance and umbrella liability insurance
  • Tuition
  • Miscellaneous small expenses. You may want to designate a certain amount of money you don’t have to track every month, such as enough cash for the occasional coffee or for parking. Be careful, though. Small expenses that happen too frequently can run your budget off track.

Make your budget work

You can use a spreadsheet program, or even pencil and paper, to quickly make a basic budget. However, technology can make budgeting and tracking expenditures much easier.

Grant Gallagher, financial education manager at Basking Ridge, New Jersey-based Affinity Federal Credit Union, said those who are budget-averse can turn to apps to help create them quickly.

There are plenty of apps available today to help consumers create a budget. When consumers tie their bank accounts and credit cards into these programs, the apps also track consumers’ spending, showing them in real time how close they are to reaching their spending limits in different categories.

Gallagher recommends apps such as Mint, You Need a Budget and PocketGuard. Each of these apps will keep track of your spending to help you stay on track during the month. They also provide advice and tips to help you manage your budget successfully. Some credit cards such as Apple Card offer budgeting tools as well.

“Budgeting has changed dramatically,” Gallagher said. “People used to save receipts in a shoebox or plug in their transactions in a spreadsheet. Today, you have apps that not only track transactions but look at them on a monthly basis and visualize the data for you. People who are fans of sticking their heads in the sand don’t have an excuse anymore to not budget.”

You may want to save your pre-crisis budget first, so you can refer to it as you work on your modified budget. After you create your new budget, either by hand or using a software app, you can see where you stand financially during the coronavirus crisis.

Your income may have decreased. On the other hand, you may have other sources of income, such as unemployment and payments from the stimulus package. Only by creating a budget can you make your best estimate of how the crisis will affect you, and what you need to do to succeed.

The most important part of creating a budget is making adjustments after the first draft. If your first try at a budget shows more expenses than income, you’ll need to find ways to make up the difference. You might be able to find alternative sources of income, such as selling something you own, working at a business that is busy during the crisis or taking money from savings.

Just knowing where you stand in the new reality can help you rein in expenses. Entertainment, pizza delivery and online ordering may need to be cut back to make sure you stay within your budget. If necessary, you may make temporary cuts to help you get through this crisis, such as slashing online services, cutting savings and retirement contributions and avoiding clothing purchases, take-out food and dining out.

Think of this as a baseline budget. It’s not permanent, and it’s not how you want to live forever. But you need to know how much money you can save when every dollar counts.

If you still have budget shortfall and you don’t have cash to fall back on, you may need to work with your bank, landlord and other creditors to see how they can help you during this time.

Leverage credit card rewards to stretch your budget

Kyle Kroeger, the Minneapolis-area founder of the personal finance site Millionaire Mob, said he uses his credit cards strategically to earn the most rewards points or cash back bonuses possible.

Kroeger recommends that you do this, too. When you rack up cash-back bonuses, you can save money on everything from dining out and groceries to car maintenance and home furnishings. It all comes down to how you use your cards.

Say you have a credit card that pays you cash back every time you use it to fill your car’s gas tank. Those savings can reduce the amount you spend on gas every month, helping to ensure you don’t overspend on these budget items.

Maybe you have a card that provides cash back on grocery store purchases. If you only buy groceries with that card, you can shave your food expenses each month, Kroeger said, again helping you fall under budget in one of the big-four categories.

Kroeger uses holiday spending as an example. He used his Chase Freedom card for his holiday spending in 2018, earning a 5% cash back bonus (on up to $1,500 in combined purchases) at all department stores during the fourth quarter of the year following activation of the category bonus.

“I tell people to take advantage of those rewards points,” Gallagher said. “If you can get 2% back on everything you buy, and you are going to buy those items anyway, why not throw it on the card? That cash back is a bonus that you can use to reduce your expenses.”

Use cash back to pay down debt

Rewards points can also help you pay down your credit card debt. When you earn cash back, for instance, use that cash to pay down what you owe on your credit cards.

If you budget $500 a month for paying off debt and you earn a cash-back bonus of $100, you can apply that bonus to your debt.

You’d then only have to come up with $400 on your own to meet your goal for that month.

See related: How to redeem cash back

Take advantage of credit cards as a planning tool

There’s another benefit to using credit cards for most of your purchases: Each credit card statement will list what you spent money on. This can help you more easily track your expenses each month.

It’s important to pay off your credit card balance each month, so that you won’t have to pay interest. But those consumers who use their cards wisely will find it easier to not only track their purchases but to earn rewards points that they can then use to shave their monthly expenses.

Add online shopping portals to your budgeting strategy

Online shopping portals such as Rakuten (formerly Ebates) and Swagbucks can also help reduce your monthly expenses. Again, this is helpful if you plan on buying those items anyway.

Finding deals at Groupon and Living Social can help you save on restaurants, groceries, hotel stays and entertainment, all of which can help you meet your monthly budget goals.

Jaquetta Ragland, the Winston Salem, North Carolina-based owner of YoungandFinance.com, agrees that shopping portals, coupons and rewards points can save you plenty of money. But be careful. It doesn’t make sense to buy items cheaply through a shopping portal if you wouldn’t have bought those items otherwise, Ragland said.

“Coupons can save families and individuals a lot of money, but not if you’re going to buy items you know you’ll never use,” Ragland said. “It isn’t wise to use credit cards on items you don’t need just to earn points. My motto is, ‘Work the system. Don’t let the system work you.’”

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more