Imagine you’re spending $2,000 every single month on life essentials, for example grocery shopping, travel, entertainment, or dining, without credit card rewards or cashback. Those $2,000 are basically just money thrown away, and you’ll never see it again. But if you start optimizing those $2,000, and even if you’re just getting 1% cashback every year, that’s $240 every single year. However, if you’re just getting 1%, that’s actually pretty conservative because if you’re smart about your spending and smart about optimizations, those $240 can easily turn into double or triple the value.

Also, if you’re smart about redeeming those points, this can turn into a free weekend getaway or even a full week of vacation for you. If you’re someone that has heard about reward travel, you see your friends doing it, you see people around you doing it, but you have no idea where to start, this video is exactly for you because I realize that my own friends don’t know how to do this.

Let’s explore step by step for you to get started with your credit rewards journey. If you spend $2,000 every single month, you could spend $500 on groceries, $300 on dining, $250 on transportation, $300 on travel, $250 on entertainment, $200 on personal care, and $200 on shopping. Now let’s see what those expenses could turn into from a points perspective. $500 on grocery shopping could turn into 2,500 points. Dining could turn into 900 points. Transportation could turn into 750 points. Travel could turn into 900 points. Entertainment could turn into 500 points. Personal care could turn into 1,000 points or even more. Shopping could turn into 400 points as well. As you can see, we can multiply all the expenses that we had with a certain point system.

For example, groceries will earn you 5 points per dollar, travel will earn you 3 points per dollar, and that’s the rewards credit card companies offer you. For different credit cards, you have different reward structures. With this example and that spending, you would earn around 7,000 points every single month. If you keep spending the same for the whole year, those 7,000 points can turn into 84,000 points, which is a lot. Now if you wanted to turn those 84,000 points into direct cashback, you could do that at a rate of 1 point for 1 cent, which would lead you to $840 in cashback. But if you spend those 84,000 points wisely, you could easily turn them into either a luxury weekend getaway or even a full week of vacation if you’re on a budget. Imagine how this can transform your life later on. You are earning a certain amount of money now, you’re spending a certain amount of money now, but in five years you’re probably earning more and you’re also spending more, which means you’re also earning more points as a result, and it leads to more free travel.

Another tip here is that if you’re smart about this, you can even pay your rent with your credit card. So if you’re thinking, “Oh, this sounds great, but I don’t know if I can do this,” yes you can. First of all, let’s look at the difference between points, miles, and cashback because those are terms that you will hear all the time. Cashback is exactly what it sounds like because you earn a certain amount of money back for the money that you spend. For example, if your card offers 2% cashback and you spend $200, you actually get $4 in return. Then we have miles and points. They’re essentially the same, but miles are more common when you have a travel credit card. For example, if an airline gives you a travel card, they often call it miles, while points are more used by everyday cards. The next thing you want to do is understand which card works best for your needs. For example, there are everyday purchasing cards, travel credit cards, store credit cards, or cards for certain categories. Each of those credit cards offers you a different reward structure, and often it makes sense to have multiple credit cards to cover all of your bases.

If you’re new to this credit card journey, it’s better to get two cards. One is an everyday purchasing card, and the second is a travel credit card. Most of the big credit card companies have travel partners, for example hotels or airlines, that you can transfer your points to, and often you get much better deals.

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