About 6 months ago to the day, my wife and I made the decision that money was leaking out in too many places. We couldn’t plug the holes because we couldn’t find them. We needed a quick method of understanding where our money was going without having to stare at long reports. That’s when we discovered Cash. (Insert choir of angels here).
The year is 2009, and many of us have forgotten Cash. It wasn’t that long ago that real money (Cash) was exchanged for real goods or services. With the advent of Visa and Mastercard (and AMEX, and Discover, and…you get the point), Cash has gone by the wayside.
No longer do we receive, count, or consciously spend our own money. Plastic is the new Cash, and all that’s required (sometimes) is our signature. And by Plastic, I mean debit cards, too.
Watch someone pay with Plastic for something in a store. Ask them how much they spent when they walk out…and watch them stare back at you at a loss for words. They have no idea. Well, they probably have an idea. $30 or $40 bucks, maybe.
You think I would have an idea if I used Cash? Bet on it. $35.66, look – here’s my change.
When we discovered Cash, we were hard-pressed to let it go for three months. The experience was eye-opening, refreshing, “earthly” or “real,” and not to mention very beneficial to our checkbook. How or why we did it is irrelevant for the discussion at hand and the subject of a future post.
What I will offer you are eight very compelling reasons to try Cash for yourself and re-discover your frugal self.
- Rediscover your priorities. Nothing changes your mind about spending money on something faster than looking in your wallet and seeing the $100 that has to last you the rest of the week. You’ll start to think twice about everything. Needs become wants. Even needs get postponed. Out of the rubble emerge our spending priorities – make note!
- Watch your spending habits change. You’ll suddenly notice when gas is five cents cheaper at this station versus that one. Or that this brand of napkins has a lower per-unit cost than that one. Do you seriously consider things like this when swiping Plastic? Don’t kid yourself – research confirms you spend way more with cards. As long as you stick to cash-only, you’ll be meticulous and careful with how it leaves your wallet.
- See real money exchanging hands. There’s something intangible about taking a wad of bills and handing it to a cashier for your $5 morning coffee. You could say it hurts inside. Pain is good – it’s our body’s subtle message that something has gone horribly wrong. Make note!
- Experience the joy of counting money (and saving your coins). When was the last time your family experienced the fun of collecting coins for something, and having to find ways to wrap and redeem them? We have enough saved in coins from the last few years to take a fairly nice vacation together. Or that other thing people forget to do…save it!
- Cash is the ultimate envelope budget. There’s no need to check a computer software – when you’re out of money, you’re out of luck. $0 is your budget.
- Planning ahead is suddenly a necessity, not a choice. If you know you have something to buy on Friday, you better believe you’ll be thinking about it all week and planning ahead. Or that birthday party you need to attend later this month? You’ll be putting away a few dollars each week for a nice present or your end-of-month wallet will look a little thin.
- Cash is so flexible, a budget is almost pointless (almost!). For the three months my wife and I used cash, we had no budget. Yet we spent less money overall than at any other point in our lives. We knew our weekly overall limit with a glance into our wallets, and we stuck to it. Ironically, a budget was needed to start the process so we knew how much to withdraw. As I said, almost…
- Overdraft fee? Over the limit fee? Forget about it! Your wallet doesn’t charge you for using it, and it will never let you overdraw your balance. It doesn’t cost money to take cash out of it, and depositing is a mere movement of the hand. The pinnacle of financial simplicity!
How much to use for your diet? Of course, that depends what you’ll be using cash for – there are still things in life that are better paid through our checking accounts, like regular bills. For everything else, there’s…Cash. If you have a budget in place, simply add up all of the remaining categories, find a monthly total, and divide by 4. That will give you an approximate weekly number to start with. I would challenge you to reduce the amount each week and see how you do.
Finally, a small word of caution. Please don’t get me wrong – using cash all the time, for all purchases, forever and ever…is not the way to go. A cash-only budget has just as many negatives as the benefits it offers. But a temporary, eye-opening diet is just what the doctor ordered, and will get you well enough to go back on Plastic in no time.