How To Stick To Using Cash Only For Your Budget

I always find carrying a debit or a credit card a risky affair while stepping out to shop. Spending can easily go out of hand when all it takes to buy anything is a simple swipe of a card. I tend to buy even the things that are not needed simply because I can see some money in my bank account. But the scene is entirely different when I avoid carrying plastic money as it becomes easy to keep a track of how much cash I have left before I go on a shopping spree to buy everything that is appealing to the eyes.

In a world where going cashless is widely promoted, I find it much easier to stick to using cash on a daily basis as it helps keep my spending under control. Moreover, it also helps me avoid spending more than what I actually have. After all, being under credit card debt isn’t really a pleasant situation to be in.

Going cashless vs sticking to a ‘cash only’ budget is something that can always be debated. How you choose to spend your money depends entirely upon your spending habits and the mindset you have towards money. But using cash as much as you can has its own benefits that totally outweigh the risks:

  • It will keep your expenses in check: If you’re someone who buys things on impulse, you might want to switch to using cash only for your expenses as it would help put a limit on how much you can really spend and you won’t stand the risk of throwing away your savings in a swipe. Cash is something that you have to give away when buying something in return and I’m pretty sure you’ll accept the fact that it’s painful to hand over your hard earned money.
  • It will help keep you away from debt: Stepping into a grocery store or a shopping mall with nothing but a credit card in hand can get dangerous at times. People often find themselves buried under credit card debt because it gets difficult to stick to your budget when there’s no limit on how much money you can spend. A wallet that has cash will help you stick to buying only what you need with only the money that you have in it.
  • You can save a lot of money: Banks charge interest on those credit card debts besides the annual credit/debit card fee which you can easily avoid by using cash for your purchases. Moreover, you are less likely to overspend when you know that you are carrying only a limited amount of cash in your wallet and that you need to save it for more important things.

Going cash-only can save your life if you have been struggling to keep your finances in control. However, in order to stick to using cash for your daily purchases, the first thing you need to change is the mind-set that you have towards money. It’s important that you prepare yourself for using cash as much as possible no matter how habitual you have become to making card payments. But once the determination sets in, you can be saving a lot of money in no time simply by using cash as much as possible.

Here are a few ways that can help you in adopting a cash-only lifestyle:

1. Keep plastic money at home: It’s easy to spend more than what you have in a tap-and-go world. Make sure that you carry only cash while stepping out of the house so that you don’t go overboard with your spending. Avoid using debit/credit cards as much as possible if you want to avoid the risk of landing in debt or swiping away your savings.

2. Use the Cash Envelope System: Maintain envelopes for all your major expenses and set aside the required amount of cash for each one of them. Take these envelopes along every time you go out to shop. This will help keep you track of the amount of money you are spending on each category and will prevent overspending owing to the limited cash allotted to each category.

3. Set aside dates for ATM cash withdrawals: You need to be having cash to facilitate your payments which makes it important that you conduct regular ATM visits to withdraw cash. Make sure that you withdraw a limited amount of cash every time you visit an ATM as it will help keep a tab on how much you are spending.

4. Specify the categories for using cash: Decide on the categories for which you will be using cash and make it a point that you don’t use your card on them. At the same time, specify the categories for which you will be using your cards as there are certain purposes where cash payments are not possible. Save your card money to pay your loan installments and for the e-commerce sites that don’t take cash payments.

5. Track receipts for cash purchases: It’s easy to track your purchases while paying online as they are reflected on your bank statement. But it can be tough to do the same when you are making cash payments for majority of your expenses. When going cash-only for your budget, it’s important that you keep all your cash receipts in a folder maintained for this purpose so that you are able to determine where your money is going.

6. Maintain an Emergency Fund: Emergencies can suck the savings out of your bank account if you don’t have any cash saved up for them. In a world full of uncertainties, maintaining an emergency fund has become a necessity as it provides you a much needed cover for the unforeseen financial emergencies. Emergency fund should preferably be maintained in cash and should be kept away from your reach so it doesn’t get used up to pay your non-emergent expenses.

7. Carry limited cash: Going cash-only is no guarantee that you won’t be overspending your money. In order to be successful in sticking to using cash on a daily basis, you need to stick to the cash limits specified for your expenses. If you are going out for a shopping trip, carry only the amount of cash that you might need to avoid buying things on impulse.

8. Make adjustments to your budget: You might need to alter your budget a bit if need be. If you think that the amount allocated to utilities is more than what you need, shift the surplus amount to a different category that needs it. This will prevent you from shelling out money from your debit/credit card to make up for the shortage of cash in any particular category.

Going cash-only for your budget has its own set of benefits that can help you save a lot of money without really doing anything. You are not only more likely to stick to your budget, but you learn to value your purchases when you are parting with the cash in your hand.

Have you ever considered sticking to cash on a daily basis? Has it helped you in achieving financial stability? What all methods did you use to go cash-only for your budget?

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