Go on a cash diet
One of the reasons people run out of money is because they aren’t in tune with how much they spend. It’s too easy to take out the plastic and swipe away your funds. The problem is, you then run out of money for the finer things in life, like a round of games in your favorite online casino, Canada whiskey or avocado toast. When journalist Katherine Elkins realized that she was spending too much money, she decided to “buckle down” and go on a cash diet. Her decision to spend no more than $60 every week for eight weeks resulted in some great insights into why going the cash-only route can save you a lot of money.
Cut up your credit card
Going on a cash diet means you have only $60 a week to pay for everything except for your fixed costs like rent. In other words, that’s your entire budget for commuting, socializing, eating and exercising. Sounds impossible? If Elkins could do all of that and in New York – not exactly the cheapest city in the world – then so can you. The point is that if you’re keen to put aside some money for your financial goals, trading in your credit card for cash money is one of the most effective ways to save. The first and most important reason is that using cash makes it more difficult for you to spend money in the first place. A credit card is like a magic wand – you swipe it and presto, you’ve made a purchase. The mindlessness of it makes it easy to spend, spend, spend. But imagine you had a pile of dollar bills and they just vanished – that wouldn’t be so great, would it? Using only cash forces you to think harder before making spending decisions. Be a conscious consumer! (Don’t really cut up your credit card, okay? That was a way of getting your attention. You might need it in an emergency. Just don’t take it with you to the shops.)
Be in tune with your spending
Do you use a spreadsheet to keep track of your daily purchases? That’s too much discipline for most people – most of the time, the only record they get of how much they’ve spent is the bank statement at the end of the month. For some, that list of numbers adds up to a horror story worse than the darkest imaginings of Stephen King … However, if you’re going the cash-only route, it’s really easy to keep track of whether you’re within budget. Just open your wallet and count your bills! Not only will you be automatically more in tune with what you’re spending, but you’ll also develop a filter for purchases that really don’t add value to your life or, to borrow a phrase from Marie Kondo, “spark joy”. When you realize how much a short cab ride eats into your budget, you might just walk next time.
Force yourself to stay on budget
How many times have you told yourself, “I’m only going to spend so much this week – nothing more”? More often than not, at the end of the day, your target number will be nothing more than wishful thinking – possibly coupled with a little regret. It’s just too tempting to spend money on stuff. That all changes, though, when you go on a cash diet. By turning your target number into a physical and limited number of bills, you can actually see and hold your target number – and when it’s gone, it’s gone! An empty wallet means no more spending cash for the week. Now if you hit Wednesday and you’ve got no budget left to feed yourself, you might want to try the less extreme version of the cash-only diet. Think about some areas of your spend that could use some trimming and use only cash just for them. Say you want to cut back on your grocery bill – figure out how much you want to spend and head for the ATM. Be sure to leave your credit card at home when next you visit the store!