Take Control of Your Spending With a 30 Day Cash Only Challenge
If you’re having a hard time controlling spending and staying on budget, it may be time to try using cash for a little while. Credit and debit cards are easy and convenient, but they make it very easy to overspend. When using plastic, you may not realize how much small purchases add up and how much you’re really spending. With cash, you get the feeling of physically giving up your money. You can SEE how much you’ve spent and how much you have left to spend. If you feel like you’re having trouble with overspending, or you just want to challenge yourself (and save money simultaneously!), try a cash only challenge for 30 days!
To make the best of your cash only month, create a budget to determine how much cash you’re going to need. Make a list of your discretionary spending categories (groceries, household items, fun, dining out, clothing/shopping, etc.) and decide how much cash you’ll need for each category. You can continue to pay your fixed expenses with autopay or a card, but try to use cash for all of your daily spending.
Once you have your numbers, determine how you want to organize your cash:
- Envelopes — make separate envelopes for each category and allocate your cash among the envelopes. A small accordian file could be used here also.
- Clips — same concept but using small binder clips/paper clips instead of envelopes.
There are several different ways to do this, but they all stem from the same concept. Pick what works best for you.
Determine whether you want to remove all of your cash from the bank at one time (I prefer this method) or do it on a weekly basis. Once you have your budget prepared and your cash allocated, you’re ready to start your cash only month.
When going out to buy anything that fits within your discretionary categories, make sure you have your cash on hand! Add up the prices of the things you’re planning to purchase as you place them in your cart to be sure that you’re not buying more than your cash will allow. Having a limited amount of cash limits your purchasing power. If you get to the point where you’ve used up all of the cash that was allocated to a certain category, you have to decide to either not spend anymore in said category for the rest of the month or cut funds from another area. Keeping this in mind early on will help you focus on spending more wisely and staying on target.
You may find that you save money in some categories because you’re more conscious of what you have available to spend and you’ll tend to spend less. Because you’re using cash, you’re more aware that you don’t have much wiggle room. This is easy to overlook when using credit or debit, and it forces you to really think about your purchases and be intentional with your spending.
After completing this challenge, you’ll (hopefully) be at a place where you’re spending less and saving more. You may decide to continue to cash flow all of your variable expenses or you may return back to plastic. Either way, you’ll be more mindful of your spending. You’ll also have a better idea of where your money is going and this will help you with budgeting going forward.