Cash Only Budget and Pros and Cons

A cash-only budget is practiced by many every day. The question to ask, though, is it feasible to use this method of budgeting. As the economy slides more and more downhill, people become more budget aware, especially cutting costs here and there. When you are looking at a cash-only budget, here are a few pros. However, to start, you may wish to prepare a budget in a spreadsheet to know what categories you will need and approximately how much to allocate to each. You can get a simple to use spreadsheet budget from https://kgmeyerpc.com/product/braving-budgets-and-printable-budget-book/ or create your own in something such as Excel.

PROS

  1. If you are considering a cash budget, it will help you become much more aware of where you are actually spending your money daily. You may find yourself paying much less for certain things because you don’t have that piece of magic plastic (credit card) to tempt yourself with.
  2. It actually will force you to take a closer look at the money that is leaving your hands. If you have just so much set aside for each bill, then you will be less likely to overspend. You will also begin to rethink your overall spending habits. Such as avoiding name-brand items when you know you can get the same item (without the name brand) for much less money. Here is where comparison shopping can make a difference with pricing.
  3. Another great advantage of a cash-only budget is that you will avoid all those credit card fees and interest charges, which can add up over time. Let’s face it. You may be a person who uses a credit card to pay your bills, and when things are tight, tend to overspend. Perhaps you are even tempted to make late payments, adding on late charges and additional daily interest. And then there is the “Big Sin” when you plain go over your spending limit or go over the allowed cash benefits for the month. When you have cash versus credit cards, you don’t have to worry about this because quite simply, when the cash is gone, it’s gone. This will also help you not indulge in things you don’t need as often as you would with a credit card. This only works provided you do not use a credit card and stick with the cash-only method.
  4. You will also find yourself not eating out as often as you would with a credit card. When you do dine out, you find yourself looking at the cheaper menus to save money. Again, a variation of comparison shopping but with your meals.
  5. When you are done paying your bills at the beginning of the month, you will see your savings. This is a great bonus—instant motivation to stick to your budget and stay with the cash-only method.

For many people who desire to use the cash method, I still recommend that you have a secondary budget of some sort. I find that a spreadsheet to help establish the categories and amount to be allocated to each helpful coming from such a tool. It provides you a good and simple look at what you plan to do and achieve. Also, many use a series of envelopes to aid in managing the cash budget system, and they are available from https://kgmeyerpc.com/product/cash-budget-envelope-system/.

If you require assistance, please feel free to contact me directly or contact another fee-only Registered Financial Consultant.

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