As soon as I got my hands on a debit card, I couldn’t control my spending habits. It’s so easy to simply swipe your card and purchase anything and everything. After falling into a good sum of debt, I quickly realized that my spending habits weren’t working. So, how could I fix them?
When my friend told me I should try a cash-only budget, I thought she was crazy. I thought my spending habits with my debit and credit cards were bad, but I could only imagine what would happen if I only carried cash. Of all the things running through my mind, I instantly thought that carrying cash might make it easier for me to lose my money.
Eventually, I put aside my hesitations, and committed to a cash-only budget. To my delighted surprise, a cash-only budget has transformed my spending habits forever. Here are just a few ways I have benefited from only using cash:
- Basic Money Management
When you only use cash, you’re forced to see exactly how much money you have. In other words, you can visually compartmentalize your money to pay for basic things, like rent and utilities, then the rest for whatever else you want to use or save it for. Using only cash isn’t like using a debit or credit card. Instead of going on a shopping spree then avoiding checking your bank account balance or reading the overdraft message, you’re forced to come to terms with having a certain amount of money to spend on the things you need and want. In other words, this teaches you basic money management skills that are necessary to have financial success.
- Needs vs. Wants
Like I said, you can visually see how much money you have at any given time. Ultimately, this means that your rent, utilities, grocery budget, and other living expenses are literally sitting in compartment in your wallet. Instead of relying on your credit card to hold you over for a month’s worth of groceries while you use your debit card to go on a shopping spree, you’re forced to come to terms with what you can and can’t afford.
This helps to put in perspective your needs vs. your wants. Soon enough, you’ll catch yourself evaluating whether you need or want everything from food to clothing and even experiences. Everything will quickly become either a need or a want, and you’ll get better at deciding which things you need vs. what you want in time.
So, how is this beneficial? Well, when you’re not eating out all of the time or emotionally shopping, you will be see emotional, physical, and financial benefits. If you stop eating excess junk food and start cooking at home, you’ll probably lose weight. And if you stop buying things you don’t need, you will finally have enough money and space to invest in a special object.
- Great Things Come in Time
That brings me to the next benefit of purchasing a large investment. Let’s say you want a new fancy computer or want to take a luxurious vacation. With an all-cash budget, you won’t be able to make this splurge on a whim. Instead, you will have to learn how to save, as well as thoroughly think and plan out your splurge item or experience. And when you finally purchase that glamorous item, or take that expensive luxurious vacation, you’re going to be overwhelmed with happiness that you waited until you were in a better financial position to splurge on that purchase.