It is no surprise that the use of credit and debit cards are becoming more popular every year. With that being said, it is also no surprise that the amount of debt the average American carries is on the rise as well. Even though using credit or debit cards can be a convenient payment method, it often leads the spender to make frivolous purchases and to lose track of a budget. The challenge for many people is that when you don’t see the actual changing of money between hands, the value of that money can start to diminish and send a person’s spending habits out of control. In this article, BatesCarter provides some great tips and tricks for individuals who want to better manage their money and reduce their personal spending. We also have some great resource articles for business owners looking for better cash flow management techniques.
By utilizing a cash-only budget, you have the advantage of actually seeing the money you have allotted for spending. You can also physically and visually watch the contents of your wallet decrease with each purchase. This often causes the spender to have a second thought about a purchase that may be desirable, but may not be necessary. Being aware of how much you have spent and how much you have remaining is sometimes all a person needs to realize that their spending has become unwarranted.
Developing a Budgeting System
One common budgeting method is called the “envelope system” and it has worked with numerous individuals who have problems with overspending. Once you’ve figured out your weekly or monthly budget, use different envelopes and allot cash for each of your discretionary accounts. An easy way to think of it is that if you can eat, drink, or wear it, then you should use cash for it. When the envelope runs dry, you’ll know that the new sweater you wanted or the afternoon espresso you were going to purchase might not be so necessary anymore.
Try implementing a cash-only budget in your life and see if you can be successful at cash budgeting. If you notice a positive difference in your spending habits, it could be beneficial for you to stick with it for a while. If you choose to resort back to the “plastic system” because carrying around lots of cash makes you nervous or getting cash from your bank is too inconvenient, remember to take with you those lessons that you learned from having to hand over your hard earned cash.