Not everyone who uses a budget likes to use cash but some people were meant to use the cash only budgeting system because it’s right for them.
A budget for us meant that it was going to help us build wealth and keep us debt free along the way. So far I have to say it’s doing its job but it’s not working on its own. It takes two, the budget and you to work.
Cash is something that most people hang on to for dear life and not in the sense of saving but making sure they don’t lose it. Why? It’s simple. Cash can get you from point A to point B or buy you whatever you need.
Cash is what makes the world go round and what keeps most people sane simply because when we have no cash, life sucks.
The problem with cash for some people is that they don’t know how to hang on to it nor do they know how to use a credit card properly.
Forget the credit card the debit card is a much easier form of plastic to blow money with and it’s used widely but not everyone knows how to handle cash and plastic the same way.
I know I’ve said budgeting isn’t rocket science and it’s not but for some people the simple art of saving money is difficult. I know one lady who has had many credit cards over the years and each one has been maxed out.
She can’t control her spending habits with a credit card so how on earth would a budget work for her? Sure she could budget IF she wanted to but if she is freely spending money she doesn’t have, the odds are the budget will never balance nor would she have the savings to pay for the credit card in full each month.
That is where the credit card frenzy becomes fun for those who do pay off a credit card in full each month. One of my fans gets so many perks using a credit card she doesn’t even care how much interest they are charging. Why? Simple, she pays the credit card in full each month. She is responsible with her credit cards and knows that if she is smart she can make the credit card work in her favour which helps her and her husband travel for nearly nothing each year.
We are the same with using a credit card and hardly ever have cash on us or use the debit card unless we have to. Most times if we are forced to use a debit card my wife and I look at each other trying to remember the pin number, lol. That goes to show you how often we use it.
Earlier last year we had a guest post by Eva from Teens Got Cents and she talked about using the cash envelope system which is a great alternative for those who want to budget but just can’t get a grip on using available credit or they simply don’t have any available credit.
The key factor here is that using a cash only budgeting system still means that you are responsible about how you are spending your money. You still need to document your expenses and pay off your debts each month with the cash. The simplified part with the cash only budget is that you are using cash. Once the cash is gone, it’s gone.
Getting rid of credit cards
Our friend who just can’t seem to work the available credit in her name has since gotten rid of her credit cards which was a choice she made on her own. If you decide to cancel your credit cards I’d make sure to order your free credit report to see exactly what you have for credit cards in your name and consult with a professional.
If you know that you can’t sit down each week or at least once or twice per month to input data into a budget so you know where all your money is going and what you have left to spend chances are a cash only budget is better for you.
I’m not saying it won’t work just guessing how much you’ve spent all month using credit and debit cards but if you can’t pay the cards in full nor care about how much you’ve spent why waste your time with a budget in the first place.
Credit cards were never meant to be used as free money even though many people use them that way with excuse after excuse how they will pay them off. For some reason doing the math paying interest on the balance doesn’t register and even if they do find out how much the credit card companies are making from them they don’t care.
As long as no one is knocking on their door trying to collect money and that minimum balance is being paid, all is good. That’s a bad attitude to have and if you want to tell me you have no other choice I’ll say then you need to make a decision and fast because you’re credit card won’t last you forever and you still need to pay that money back and live.
Using cash to budget is great for those who don’t want any money temptation each month. It’s also a great way to manage your obsession with shopping and spending on items you don’t need.
I often see people selling stuff online and wonder where on earth they get all of this stuff let alone store in their house. Sometimes you see the oddest items and wonder if they actually bought it or someone was silly enough to blog their own cash to buy it as a gift for them.
Cash only is the one way that will force you to stick to your budget as long as you make sure you keep true to monitoring your budget. It’s easy to spend cash just as fast as using debit or credit cards so learning how to say no I’m on a budget is still important. If your friends want to go out for dinner and you have no cash in your wallet, say no sorry not tonight. End of story.
They will understand if they are your friends. If you feel left out because you don’t have enough cash to do things with your friends then pay down debt, earn more money and save more money.
It’s not that hard to figure out really but if you choose to ignore the simplicity of budgeting for life then you have to deal with the bills coming in and finding a way to pay for them or limiting what you can do because there is no more money to go around.
A great way to start learning if the cash budget is for you is to hide those credit and debit cards and forget about them for a few months. If you still owe a balance on them you will need to pay them. You hid the card not what you owe on them, so don’t kid yourself.
If you don’t already have a budget in place you can download our free excel budget at Canadian Budget Binder if you like. You don’t need to pay to use a budget it’s fairly straightforward although there are some other great free budgeting systems on the internet so choose what’s right for you. Some people thrive on the pen and paper budget keeping notes in a budget binder or book and that’s fine as well.
I post our family budget every month for 2 adults so if you want an example of a real budget simply search this blog under the “Our Budget” category and see how we are spending our money. Not every month is great but what we know is where our money is going.
The great thing about a paper budget is that you can keep it on you at all times or if you have one of those fancy phones there are many budgeting apps that allow you to check in on your budget if you need to while you are out. For us, we are confident in knowing our numbers and what we can and can’t spend when we go shopping because we update our budget weekly.
If you like the cash envelope system like Eva or any other system to separate how much cash you have to spend in your budget categories use what’s easiest for you. Don’t forget to always ask for receipts whether you use cash or not because without your receipts it’s difficult to track your spending and guessing isn’t going to be good enough for a budget.
Calculate your basic average income that you brought into the household over the past 3-6 months. It’s better to budget using a lower net monthly income than a higher one especially if your hours fluctuate. This will give you a more accurate figure to budget with.
For the next few months use the cash only budget and see if you are able to pay down your debts faster and stop spending money you don’t have. Eventually you will know whether the cash only budget is for you or you simply aren’t meant to budget at all because you aren’t devoting the time necessary to getting or keeping your finances on track.
You may think carrying that credit card with you and taking out a cash advance on the card is smart, but think again. You’ll pay dearly so put the credit cards away so you give yourself a fair shot using cash only for the few months. At the end you can check how you made out over the course of the 3 or so months and decide what’s best for you.
I’d suggest talking to a professional financial advisor or someone who specializes in helping people one on one with budgeting their money if you’re still struggling with your finances. Sometimes it takes more than reading a blog post or articles on the internet and you need someone to guide you in person. If that’s you then do what you need to do, after all isn’t your life worth that much?
Do you use a cash only budget and how has it changed your life?
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