How to save the MOST with a Cash only budget.

I read an interesting article from CNBC about saving money with cash only budgeting and wanted to share it with you.  I’m sure by the title you’ve guessed what it’s about.  Cash only budgeting definitely works.  With the tap and go world we live in today, it doesn’t take much thought at all to just pay.

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The pain of paying is felt more quickly with cash than with cards. The pain is felt later with cards.  With cash, it is parting the way with the money right then.  It makes you pay more attention to what items you have, how much money you have and how much money you want to spend.  It’s so easy for us to say, “Oh I just want to go in and buy these 3 things”, then pick up 2 more items (we didn’t think of before) go to the register, tap and go.  But, if you take 30 dollars, and you want (for example) in the store with you and you buy the 3 items and pick up the extra 2, you won’t be able to purchase the other two until next time. It simply makes you more accountable with the cash you have.

Take the Envelope System, for example.  With this method, you use cash for different areas in your budget and you keep cash tucked away in different envelopes.  Think of things you could use cash, Restaurants, groceries, gas, clothing, etc.  It’s a great way to budget because you don’t have to save money to start this system.  For example, if you have a $500 grocery budget per month, with the first check you take $250 and put it into the envelope labeled “Groceries” and then with the second check you put in another $250 you’ll have your grocery money for that month.

None of that money can be touched except for groceries, None! Then when you do go to the grocery store and you brought $150 for example and the total comes to $160 put some items back.  I know it’s hard but it’s worth it.  If you go with the $150 and you spend less,  any change you have left put into the envelope. If at the end of the month you have money left over, Congrats!  You came in under budget and that’s a good feeling.  Reward yourself, within reason.  There’s more to this Envelope System found here.

Do you have a budgeting system that works for you?  What do you think of the cash-only method?



3 thoughts on “How to save the MOST with a Cash only budget.

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