The solution to all three of these problems is to lose the credit cards and debit cards and use cash only.
After all, cash is king, right?
The Cash-Only Movement
There is a growing belief among some of the top financial minds that living a cash-only life will help keep your spending under control.
The idea is that paying cash controls your spending habits better than using credit or debit cards.
And when your spending is under control, your formally wasted money can now help you thrive financially by paying down debt quicker, building a strong retirement portfolio, and saving for your children’s college.
All of this by replacing your credit and debit card swipes with bills and coins.
I’m inclined to agree.
But like any financial strategy, you must exercise perseverance and self control if you want to reach your future financial goals.
For anyone trying to get a handle on their financial situation, spending less is probably on the top of their list.
Studies have shown that consumers will spend about 15%-20% less when using cash instead of credit or debit cards.
One of the major reasons is point-of-sale budgeting. Think about it, your credit/debit card doesn’t get smaller each time you use it. And there’s no “Low Budget” indicator built into your card like those batteries from a few years ago.
It’s much easier to over spend when you swipe a card vs. handing over paper bills. When you swipe a card, nothing changes. But when you spend cash, the lump in your wallet lessens, and you can see it and feel it.
Using cash helps you to think twice before making a purchase. Thinking twice aids in self control and spending more wisely. And who doesn’t love that?
Know How Much You Spend
Budgets are great (and necessary, in my opinion), but if you only consult your spreadsheet spending plan once or twice a month, you probably won’t catch overspending in time to stop it.
Paying cash for your monthly purchases gives you real-time feedback about how much money you’ve spent and how much money you have left.
Most people wind up in a financial crisis because they just don’t know how much they’re actually spending. Even small purchases can add up over time and cause havoc on your monthly budget.
Instead of using cards, withdraw a set amount of cash each week according to limits you’ve set in your budget.
You’ll be surprised how using cash for your purchases will eliminate over spending.
Can I stand up in front of everyone and shamefully admit a dark secret? I’m too afraid to live a cash only life.
Even though I have a pretty good handle on my spending, I firmly believe that I would spend less each month if I replaced the cards in my wallet with cash.
I guess you could say that I subscribe to the Use Credit Cards Wisely way of thinking instead of Cash Only.
But as I was doing research for this article, I’m pretty sure that I decided to subject myself to a 30-day cash-only experiment. Be sure to stay tuned for the results, it just might be life changing.
Which rationale do you subscribe to: Using Credit Cards Wisely or Using Cash Only?
Photo By Packmatt