I try to use cash for most of my spending these days. Sure, I still carry my debit card and ONE single credit card in my wallet, but I don’t use them very often anymore. Today, I want to give you a quick highlight of how and why I use my cash system, and what pros and cons I’ve seen from using cash so far.
How and Why I Use a (Mostly) Cash Budget
When I set up my budget plans for each month, I allocate a certain number of dollars for everything I need for the month. I give myself a set amount of cash to spend on things like groceries, entertainment, and my pets.
At the bottom of my budget sheet, I make sure that the amount of cash is an amount that is a multiple of 20 so I can easily withdraw the money from an ATM. I take all my cash from the ATM at the beginning of the month. I try not to use ATMs that do not belong to my bank so I can avoid fees. Yes, my bank has an ATM fee reimbursement option, but it’s just easier to avoid the fees all together.
After I have the cash in hand for that month’s living expenses, I divide it up in a zip-around coupon organizer with labeled sections for each spending category. I keep this organizer in my purse at all times, that way I’m never out to make a purchase without my cash.
I decided to try a (mostly) cash budget so I can more easily track and be accountable for my spending.
Prior to January 2014, when I would shop for groceries or household goods at Walmart, I’d often find myself unfazed by $120 totals each week. Sometimes I was even unaware of what the total was because I wasn’t really listening or registering how much I was spending when I’d swipe my debit or credit cards.
Spending cash makes me more aware. I have to count out the cash to hand to the cashier and I feel my organizer getting lighter and slimmer as the month goes on. I also have to prioritize what I spend and when I buy things. Yes, I do occasionally deviate from my cash budget, but for the most part I plan my purchases solely around how much cash I have left in my different categories for the month.
Pros of a Cash Budget
- Spending in cash holds me accountable for my purchases.
- I spend less and I prioritize my spending more.
- I am more aware of my money situation and what I can actually afford that if I swipe plastic to buy something.
Cons of a Cash Budget
- While I’ve never had trouble with this, some people report being scared of carrying around too much cash. They don’t want to lose it or be robbed.
- The cash envelopes can be quite bulky, but luckily, I carry a pretty big purse.
- You have to plan ahead to get your cash before making any purchases, but this isn’t really a problem for me.
If you are having trouble with accountability or tracking when it comes to spending, maybe you should try doing a cash budget. But, don’t give up on it too quickly if you decide to try it, make sure you give it a month or two before you decide if it’s for you.
Do you do most of your spending in cash?
Photo courtesy of: Jeffrey Smith