Many of us find it hard to control our expenses and have a budget each month – if this is you, it may be time to try using cash for at least 3-6 months. We all know that debit and credit cards are easy and accessible, but they make overspending very easy. Why do I state using cash? Well, there are three significant benefits of using it:
You get the FEELING of physically giving up your money.
You can SEE how much you have spent and how much is left.
You are more AWARE that you do not have much wiggle room.
How are we going to use our cash every month? As I have in a few other blogs, I suggest you create a budget to determine how much money you need.
Make a list of your discretionary spending categories - this means “wants” compared to “needs.” Or, in other words - those costs that are conditional upon your lifestyle. These would include:
Household items
Hobbies
Dining Out
Clothing/Shopping
Travel
Luxuries
Children and Grandchildren
Decide how much cash is for each category. You must attempt to use some money for all your daily spending. Once you have the number for those expenses, determine how you want to organize your money. The envelope system is the best system I know and has witnessed a few people use. I also like and credit the concept of it to one of my favorite authors, Dave Ramsey. How do you use this system, you ask?
You make a separate envelope for each discretionary spending category and allocate your cash among those envelopes. What this will do is:
Help you focus on spending more wisely and staying on target.
It helps you save money in some categories because you’re more conscious of what is available and will tend to spend less.
The objective of this each month is:
To force you to think about your purchases and calculate your spending.
To put you in a place where you spend less and save more.
Try it and tell me what you think!
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