Master the art of cash-only budgeting. Discover how cash can simplify your finances and help you achieve your goals.
Not everyone who uses a budget likes to use cash.
However, some people are meant to use the cash-only budgeting system because it’s right for them.
A budget for us meant that it would help us build wealth and keep us debt-free along the way.
So far, I have to say it’s doing its job, but it’s not working on its own. It takes two, the budget and you, to work.
Cash is something that most people hang on to for dear life, not in the sense of saving but making sure they don’t lose it. Why?
It’s simple. Cash can get you from point A to point B or buy whatever you need.
Cash is what makes the world go round and what keeps most people sane simply because when we have no money, life sucks.
The problem with cash for some people is that they don’t know how to hang on to it or how to use a credit card correctly.
Forget the credit card.
The debit card is a much more accessible form of plastic with which to blow money.
Plus, it’s used widely, but not everyone knows how to handle cash and plastic similarly.
I’ve said budgeting isn’t rocket science, but for some people, saving money is complex.
I know one lady who has had many credit cards over the years, and each one has been maxed out.
She can’t control her spending habits with a credit card, so how would a budget work for her?
Sure, she could budget if she wanted to, but if she is freely spending money, she doesn’t have it.
The odds are the budget will never balance.
She likely would not have the savings to pay for the credit card in full each month.
That is where the credit card frenzy becomes fun for those who do pay off a credit card in full each month.
One of my fans gets so many perks using a credit card that she doesn’t even care how much interest they charge. But why?
Simple, she pays the credit card in full each month.
She is responsible with her credit cards and knows that if she is smart, she can make the credit card work in her favour.
Doing so helps her and her husband travel for nearly nothing each year.
We are the same with using a credit card and hardly ever have cash on us or use a debit card unless we have to.
Most times, if we are forced to use a debit card, my wife and I look at each other, trying to remember the PIN, lol. That goes to show you how often we use it.
Earlier last year, Eva had a contribution post from Teens Got Cents, and she talked about using the cash envelope system.
Using this type of system is an excellent alternative for those who want to budget but just can’t get a grip on using available credit or don’t have credit.
Related: The Magic Cash Budget Jars Changed Our Lives
The critical factor here is that using a cash-only budgeting system still means that you are responsible for how you spend your money.
You still need to document your expenses and pay off your monthly debts with cash.
The simplified part of the cash-only budget is that you use cash.
Once the money is gone, it’s gone.
Limit Credit Card Use
Our friend, who just can’t seem to work the available credit in her name, has since gotten rid of her credit cards, which she made on her own.
Remember that cancelling credit cards can impact your overall credit score. Sometimes it’s best to hide or cut them up.
Know Your Credit Score For Cash-Only Budgeting
If you decide to cancel your credit cards, first order your free credit report to see precisely what you have for credit cards in your name and consult a professional.
Find out your credit score, by checking out Credit Verify.
Get your Free Credit Score and a $1 Credit Report.
If you know you can’t sit down weekly to input data into a budget, a cash-only budget is better for you.
I’m not saying it won’t work, I’m just guessing how much you’ve spent all month using credit and debit cards.
However, if you can’t pay the cards in full nor care about how much you’ve spent, why waste your time with a budget in the first place?
All Debt Must Be Repaid
Credit cards were never meant to be used as free money.
Although many people use credit cards this way with excuse after excuse about how they will pay the debt off.
For some reason, doing the math and paying interest on the balance doesn’t register.
Even if they do find out how much the credit card companies are making from them, they don’t care.
All is good as long as no one knocks on their door trying to collect money and that minimum balance is paid.
That’s a bad attitude, and if you want to tell me you have no other choice, I’ll say that you need to make a decision fast.
Your credit card won’t last you forever, and you still need to pay it back and live.
Cash-Only Budgeting
Using cash to budget is great for those who don’t want any money temptations each month.
It’s also a great way to manage your obsession with shopping and spending on items you don’t need.
I often see people selling stuff online and wonder where on earth they get it, let alone store it in their house.
Sometimes, you see the oddest items and wonder if they bought them or if someone was silly enough to blog their cash to buy them as a gift.
Cash is the only way to force you to stick to your budget as long as you keep monitoring your budget.
It’s easy to spend cash just as fast as using debit or credit cards,, so learning to say no, I’m on a budget is still important.
If your friends want to go out for dinner and you have no cash in your wallet, say no, sorry, not tonight—end of story.
They will understand if they are your friends.
If you feel left out because you don’t have enough cash to do things with your friends, pay down debt, earn more, and save more money.
It’s not hard to figure out, but if you ignore the simplicity of budgeting for li, you have to deal with the bills and find a way to pay for them or use the snowball method.
A great way to start learning if the cash budget is for you is to hide those credit and debit cards and forget about them for a few months.
If you still owe a balance on them, you’ll still need to pay them off.
You hid the card, not what you owe on them. Debt is debt until it’s paid in full or rectified.
Any Form Of Budgeting Is Important
If you don’t already have a budget,, you can download our free Excel budget at Canadian Budget Binder.
You don’t need to pay to use a budget. It’s pretty straightforward.
However, some other free budgeting systems are online, so choose what’s right for you.
Some people thrive on the pen and paper budget, so keeping notes in a budget binder or book is also fine.
I post our family budget monthly for our family.
If you want to view an actual budget, you can review our monthly budget library dating back to 2012.
Not every month is great, but what we know is where our money is going.
The great thing about a paper budget is that you can always keep it on you.
Also, if you have a smartphone, many budgeting apps allow you to check your budget if needed while out.
We are confident in knowing our numbers and what we can and can’t spend when shopping because we update our budget weekly.
If you like the cash envelopes system like Eva to separate how much cash you spend in your budget categories, use what’s easiest for you.
Don’t forget to always ask for receipts whether you use cash or not.
Without your receipts, it’s challenging to track your spending, and guessing isn’t going to be good enough for a budget.
Calculate the basic average income you brought into the household over the past 3-6 months.
It’s significantly better to budget using a lower monthly net income than a higher one if your hours fluctuate.
This will give you a more accurate figure with which to budget.
For the next few months,, use the cash-only budget to see if you can pay down your debts faster and stop spending money you don’t have.
Eventually, you will know whether the cash-only budget is for you or you aren’t meant to budget.
You’re not devoting the time necessary to getting or keeping your finances on track.
You may think carrying that credit card with you and taking out a cash advance on the card is smart, but think again.
You’ll pay dearly, so put the credit cards away to give yourself a fair shot using cash only for a few months.
Cash-Only Budgeting- Is It Right For You?
Ultimately, you can check how you made out over the three or so months and decide what’s best for you.
I’d suggest talking to a professional financial advisor or someone who specializes in helping people one-on-one with budgeting their money if you’re still struggling.
Sometimes, it takes more than reading a blog post or articles on the internet, and you need someone to guide you in person.
If that’s you then do what you need to do, after all isn’t your life worth that much? I know mine is.
Discussion: Do you use a cash-only budget, and how has it changed your life?
Please leave your comments below.
Thanks for reading,
Mr. CBB
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Using a cash only budget can work really well for some people. Long ago, when I did financial planning for people, I suggested a cash only budget to people who could not control their credit card spending. For some it worked. Others just had to cut up their credit cards. Thing is though, using a cash only budget, you still have to have a budget and stick with that budget.
That is absolutely true… the easier part for those using cash is once it’s gone it’s gone.
We use the cash only system for our clothes budget. All the other expenses we use a debit card. When we made the switch from credit to debit cards our spending decreased significantly and our savings rate skyrocketed.
My sister does cash only. But when I see her sitting at the table with hundreds of dollars trying to figure out what she spent money one… I just cant do it myself!
When I was in the middle of paying off debt I strictly used a cash only budget and it definitely helped me get on track and watch my spending more. Now that I’m pretty far removed from that we use a modified cash budget, it’s sort of ironic really…we still take out the cash each month but use our credit cards to earn the points and then pay those off with the cash. We get the points and stay on track, best of both worlds. 🙂
Now that’s interesting.. use the credit card, take out cash to pay off the credit card.
You know, I went cash only for years before I felt comfortable using credit cards. I had to make sure I was ready. These days, I couldn’t imagine not using credit cards. I enjoy the rewards I earn, and the convenience in tracking and categorizing my purchases. However, I definitely agree that the cash only budget is best for some people!
Same here.. the rewards are what keep us using the credit cards. Now do you fancy one credit card over another or do you open many credit card accounts to get various rewards?
Most of the bills here come out automatically. A couple are paid online. I use debit for things like groceries. It gets entered in the bank register book as soon as I get home. Back when we used our M/C we always had a post-it note attached to the bill that we used to write down what was charged on it as soon as possible just like we did with the checking account. When the new bill came in I would check off things from the post-it to the new bill.
Cash is used for the little things like a newspaper or some such. We keep a very close eye on what is spent, or at least I do…. Cash would be too easy to spend here. Having to look at that bank book and see just how fast the money disappears does help. Being visual here, seeing it go is what is needed.
It’s amazing how we all differ so much. Cash for some is perfect and for others can be a nightmare. I like that you take care of business as soon as you get home. Many people who put it off tend to forget or give up. Have you ever tried to use a cash budget or just know that it wouldn’t work?
While I agree that cash may work best for some, for me the rewards associated we a credit card are too good to pass up. I earn 4% cash back on gas and groceries and it’s really starting to add up. Mind you, it isn’t an excuse to overspend but it’s an easy way to earn more cash back. I have never had an unpaid balance on my credit card and never paid any interest
We’ve never paid a penny to interest on any credit cards and love the rewards as well. For those that simply can’t manage to use the card and pay it in full each month the cash budget is the way to go. Cheers mate
Honestly, I’m not a fan of credit card since before, I preferred to use cash instead. My parents told me before that it’s better to use cash rather than a “Credit” card. When I started reading finance blogs, I’ve learned that the credit cards have advantages and disadvantages, once you’re a credit card holder you should be fully responsible. But in the end, I still want to use cash. 🙂
I prefer using credit cards for everything. I pay it off once or twice a week – sometimes even before the charges appear. So technically, I employ a “cash” system because money doesn’t stay in my accounts – it leaves as soon as it is spent.
I don’t like dealing with cash (ie counting etc) and I LOVE the rewards I get with my credit card. It’s at least $300 in cashback rewards every year!
So, essentially you use the credit cards for rewards like we do. You just pay it off as soon as you can which is great as long as it’s paid in full. Good for you.