Posts Tagged cash

Using Cash to Stay on Budget

When I was young my mom used to joke that cash would burn a hole in my pocket, if I had cash on me, I felt the urge to spend it. Needless to say then, I was a little apprehensive to use cash to stay on budget, but since making the switch I would never go back to using plastic.

cash is king

Why Cash is King

  1. Psychological: When you spend cash, research has found that you feel it more than when you swipe a card. It hurts a bit more when you see your hard earned money leaving your hand, which means that you’re less likely to purchase things that you don’t really need.
  2. Easier to stick to your budget: When the cash is gone it’s gone so you know when it’s time to stop spending. Our cash categories include groceries, personal spending money, clothing, as well as setting aside money for any smaller miscellaneous expenses (think field trip notices from the school or birthday party gifts). When my personal spending money is gone, I know that it’s time to hold back on spending any more money until the next month. paying with cash
  3. No risk of going into debt: I know several people that swear by their credit cards because of the points that they get. I also know that nobody signs up for a credit card with the intention of getting deep into debt, but the reality is, according to statistics, the average card carrying American household owes $16,048. If you commit to using cash, you don’t have to worry about overspending and dreading the monthly credit card statement.
  4. Delayed Gratification: Spending cash means that there are times that you will need to save up for a bit before making a larger purchase. This will give you some time to really think through the purchase and decide if it is in fact something that you want to do. If you decide that you do want to invest the time to save up and pay cash, you leave with with not only your purchase, but a great feeling of knowing that you were financially responsible, did not act impulsively, and know that you were able to do it without going into debt.
  5. Less Guilt: Imagine what it would be like to go shopping without any guilt at all.  When spending with plastic, it’s easier to make impulsive purchases because you don’t feel as if you’re parting with your money which puts you in a position where you’ve come home with unplanned items and guilt. When you budget and use cash, you are giving yourself permission to spend which means nothing but guilt-free shopping trips.jar with coins
  6. *BONUS* The Change Jar = Extra Savings: When you use cash for your daily and weekly purchases, you are going to end up with a lot of spare change. Put this change into a jar and you’ll be amazed at how much you have saved up by the end of the year without even realizing it. Last year I managed to save up enough coins to cash in $160 which paid for my daughter’s Christmas stocking stuffers!!

Your Turn:

  • What categories could you use cash for to help you stick to your budget?