Many H.E.N.R.Y.s™ rack up business expenses entertaining clients, traveling to conferences, planning events, and more—all without a company card. As an employee, you’re expected to charge everything from double martinis to Uber rides to your personal credit card and get reimbursed later.
Charging business expenses to your personal credit card can suck. For starters, it’s annoying and time-consuming to pour over your credit card statements and parse out business costs from personal ones. And don’t even get us started on filling out expense reports.
But more important, it can hurt your personal finance strategy.
It’s hard to know what you can afford personally when your business expenses are lumped into the mix. If you lose track of how much you can spend on yourself, it’s easy to overdo it.
Companies also don’t usually reimburse you that quickly. You can get stuck dipping into your own savings to pay for business expenses while waiting to get paid back. You might even end up having to take on credit card debt, which can become a vicious cycle and is perhaps the surest way to never get rich.
Good news, though—this situation is easily avoidable.
Just keep business and personal expenses on separate credit cards.
This might sound ridiculously simplistic. That’s because it is. Having one credit card for your business expenses and one for personal stuff allows you to track what’s what, see how much you’re spending, and plan ahead for a steep business purchase if you don’t get reimbursed on time.
We know what you’re going to say next. What about reward points? Isn’t it better to keep everything on one card for the sake of 3X points on travel or 5% cash back at Whole Foods next quarter?
Our answer: nope! The points aren’t worth it if you wind up overspending consistently or falling into credit card debt.
Instead, we recommend using your best rewards card for the area in which you spent the most. For example, if you incur higher business expenses than personal ones (this is most often the case), and have the Chase Sapphire Reserve* card with 3X points on travel and dining, make that card your business-expense-only card. Get another card with a good rewards program for personal items, like the Chase Sapphire Preferred* card (2X points on travel and dining) or the Marriott Premium Rewards card (5X points at Marriott-affiliated properties, 2X points on travel and dining, plus 80,000 bonus points when you sign up).
A few more tips:
Don't delay filing out your business expense reports. Create a recurring calendar reminder to submit expenses every week or every other week.
Label your credit cards (sharpies work) to ensure you’re using the right card on the right expenses.
Use an expense tracker app, like Mint.com, to monitor your spending. Mint actually allows you to label a transaction “reimbursable.” You can filter transactions by that label, click “Export Transactions” and save a file to send straight to your company’s accounting department.
Want more budgeting help? Get the Stash Plan®, and we’ll help you get your financial sh*t together.
*Stash Wealth is not affiliated with Chase Bank.