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Why I Use Cash

August 25, 2014

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3466349463_d9069874fe_zI 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

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15 responses to “Why I Use Cash

  1. I used to barely use cash, but now use it a good bit. I’m one of those people afraid of carrying too much of it, but having credit cards on-hand is also dangerous. I think a good middle ground for me would be getting a debit card. I need to look into this option with my bank…

  2. Being on a cash budget is always something that has interested me although I’m still a debit card user for the most part and rarely have cash (which sucks when you’re at work at the lotto envelope goes around!). I like the idea of giving myself a cash allowance for lunches/wants/etc.. and seeing how that goes 🙂

  3. I think trying a cash budget is a neat idea. Like you said, it makes you more aware, and you know *exactly* how much you have left for each category. Just the other day I was referring to my spreadsheet on how much we had left for groceries this month. Admittedly, it’d be a little easier to know with a cash budget. I used to pay in cash all the time, but I prefer to have a record of my purchases to refer back to on my credit card statement. Whatever works!

    1. The only “record” I have with cash is my budget spreadsheet, but I don’t think I’ve ever had to really refer back to any receipts or other records so have never had problems with that.

  4. In the past I have used all cash too and it was great. I like being able to see how much I have left instead of with a debit card just swiping and I have no physical what of what I am spending until I log onto my bank account.

    1. Me too, I’ve been kind of bad this month. I used a lot of my side hustle income for fun rather than debt repayment or savings… 🙁

  5. You know, cash is not a bad idea. I still stick with a card, as I enjoy the rewards and like being able to track all of my spending online. However, the awareness that comes with a cash-only budget makes sense. Great read – thanks for sharing.

    1. I understand wanting rewards – unfortunately I can’t trust myself to be fully aware of my spending with plastic, at least not yet. I’m glad you can though!

  6. I used to carry credit cards, and racked up tens of thousands of debt. I got on board with Dave Ramsey, and of course, the first thing they teach is to destroy the credit card, and to use cash instead. I haven’t listened to his show much the past few years, but at the time, I remember him saying that he was a multi-millionaire, but his wife still grocery shops using cash in an envelope.

    My wife and I use a debit card, and we don’t have any credit cards, but I think we have been spending more with the debit card than we would if we used cash consistently. After reading this post, I think I’m going to look at going back to cash!

    1. I’m glad this post helped you think about what you are truly spending when you are using plastic vs how much you’d spend with cash. Seems like spending can creep up on you if you aren’t careful and it’s easier to happen when you pay with plastic (no matter if it’s credit or debit)!

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