So, you made a budget, what now? Well, now you have to stick to it. Mortgage or rent is easy. It is just a check at the end of the month which has already been taken into account in the budgeting process; probably in the first or second line.
Utilities are fairly predictable, but it would benefit you to turn that thermostat to a slightly less comfortable temperature. So where are the leaks in your budget? If you are like most people, your losses are happening in either food, entertainment or sometimes both. It can be those unplanned items that find their way into your shopping cart or the popcorn at the movies that you didn’t end up eating half of anyways.
Budgets are usually broken by impulse purchases, and I have never seen anyone impulsively buy a house.
If you don’t know what an impulse purchase is, you should definitely look into that more, but for now assume it is anything that they sell at gas stations that isn’t gas. Luckily, carrying cash can help you stick to your budget, particularly in these two areas.
So how can carrying cash help you with your budget?
1. You Can’t Spend Cash You Don’t Have
I am not telling you to cut up your credit cards; I carry one with me at all times. What I am telling you is don’t use it unless you absolutely have to.
It is not hard to anticipate the expenses you are going to come across in your daily life. Going to the supermarket? Make a list that includes the cost of the items you plan to get. Total it up, making sure not to forget taxes. Then take an extra twenty dollars for the things that you will not remember until you are walking into the store. It is easier to resist the urge to grab an extra bag of chips while walking around the store if you have to think about whether or not you are going to be able to afford them when it comes time to check out.
Take this mindset and apply it to other areas of your life. Leave the house in the morning with the amount of money you plan to spend that day; extra is just a temptation to spend more. Just because you have the money with you, does not mean you have to spend it. Money leftover at the end of the day just helps with the rest of your budget.
Carry cash, but not in excess. Only use your card if you get into an emergency situation.
2. Cash is More “Painful” to Spend
Credit card companies have built a lot of large buildings on the concept of making it easy and painless to spend money. By never letting you see your money, it is never real to you and becomes easier to spend. When you use your credit or debit card, you get told an amount by someone at a counter then make a quick swipe and the amount is forgotten. This process is then repeated when the next purchase comes around.
Cash is not so forgiving. Once you have physical money in your hand it is not as easy to let it go. The amount becomes real while you are counting bills of your hard-earned money into someone else’s hand for every cent that you spent. You get to watch in real-time as your wallet gets emptier every time it leaves your pocket. You remember how much money you have spent because of how little you have left.
If that all sounds unpleasant; good. Enjoy what your money buys you, not the process of spending it.
3. A Cash Budget Can Help You Save
What do you ultimately end up with if you use cash throughout the day? Change; pockets full of it. If you’re like most of us, this change goes in a jar or other container and is quickly forgotten about. Unlike the money that you forget about when swiping those cards, this forgotten money is a good thing. Why? Because it is still yours. As soon as it enters that change jar, that money leaves your budget but is still yours. These small amounts group together and become large amounts. Before you know it, at the end of the year you have another hundred dollars to either cover an unexpected expense or reward yourself for your loyalty to your budgeting process.
Using cash to assist with managing your finances can help you get your budget under control quickly. You can’t spend cash you don’t have. Not following through at the beginning of the month, can leave you in a tight spot when trying to figure out what you can afford to eat in the last week of the month. Being force to eat boxed mac and cheese is a great reminder to stick to your budget the next month. Using cash can be unpleasant compared to the convenience of swiping a credit card, but it will be worth it when your savings go up at the end of the year. Before long, the things we force ourselves to do become second nature and good habits are formed. Good financial habits are hard to come by, but you don’t have to pay a steep price if you are willing to make a small change.
About the Author:
Joshua is a father to three beautiful children, an engineer by trade, and a blogger with any free time he has leftover. He loves to share about his life, projects, and adventures on his blog, theconfusedfather.com. Join him there to read about the fun and mishaps that come with adoption, a miniature farm, and life.