No, really... Pull out your wallet and show me your money! If you are holding on to a debit card, or worse, a credit card, then this post is for you! I want to introduce our cash system to you (and the world really)! This is a system that has worked wonders in our budget, as well as our lives! There have studies that have proven that using cash activates pain receptors in your brain that are not even touched when swiping plastic. If you don't believe it, Google is your friend! If you want to spend less money, use the green stuff! Just try buying that $4 latte... It will feel different, and will probably taste a little like cardboard!
Here is what we use cash for:
1. Food- both restaurants and groceries. As soon as the money is gone, we don't buy anymore food. We have learned how to make money last by being smart and frugal, so we don't go hungry at the end of the month!
2. Clothing- Obviously this is more of my weakness than Cole's. Again, when the money is gone, no more clothes!
3. Entertainment- That's right, we take out $24 every payday (once every two weeks) to pay for our Movie Mondays!
4. Pocket Money- Each of us gets $20 every two weeks to spend on whatever we want, no strings attached. Although it is just a little bit of money, it keeps up from breaking our budget if we want to grab a snack, or if we find something that we just can't live without!
5. Tools Fund- We set aside $50 per paycheck, or $100 per month to reinvest in Cole's career. The best part about him paying for tools with cash is that he ALWAYS gets a discount!
6. Medical Savings- We are currently paying off debt, so we do not have as big of a medical savings as we would like, but whenever we have a known procedure coming up, we pay in cash and take advantage of any discounts we get for paying with "human monies."
7. Miscellaneous Items- Anything that you can buy in a store, really. Both large and small purchases; If we were going to buy a television, we would bring the cash we saved specifically for it; if we were going to get paper towels, we would bring the cash we saved specifically for it. You get the point!
This system prevents you from spending more than you have designated for a purchase (so you don't walk out with the 50-inch TV instead of the 42-inch), and prevents you from buying stuff you didn't anticipate on buying.
Don't get me wrong, I do not walk around with thousands of dollars in my purse all the time (or even often for that matter), but when we do have a large purchase to buy, we normally pull out the cash from our savings that morning and we carry it in a place other than the obvious "mugging-prone" areas (purses and wallets). If I am going grocery shopping, I bring the amount of money I have budgeted for the week, and I always carry my pocket money, just in case I find something that I cannot live without!
One important note before I leave you to your homework: Always get a receipt when you pay in cash. It is easy to say the transaction never happened if you do not have a proof of purchase. Now for the homework part: Write a list of things that you would be willing to start using the cash system for. If you are not comfortable using cash for all of these things right now, than start with an easy one, such as groceries. Take an envelope and write "Groceries" on the front and put all of your grocery money for this week into that envelope. Remember- do not, under any circumstances, use the money in this envelope for anything other than groceries, and absolutely do not use money from anywhere other than that envelope to by groceries.
We will be back tomorrow with a helpful post on creating a grocery/restaurant budget, so stay-tuned for that!
Leave us a comment: Do you use cash for certain purchases? If so, which ones? Do you find that it "hurts" more when you are using cash vs. plastic?
Picture sources: Groceries, Cinema, Medical Money, Pocket, Clothes
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