Living a Cash-Only Lifestyle

How to Live a Cash-Only Lifestyle

If you have a habit of overspending, living a cash-only lifestyle may be a good option for you. Living within a definite budget helps you towards a debt-free lifestyle. If you would like to live a cash-only lifestyle, here are a few steps to follow.

1. Categorize your spending

The first thing you need to do is determine what you’re spending and where. Divide all your expenses into categories and see how much of your paycheck is going towards those areas. If you don’t know how much you are spending, track your spending for a month using a notebook or a note taking app each time you go out to shop. The most logical categories to go cash-only on are those where you are consistently overspending. This may include groceries, entertainment, or clothing.

2. Leave the debit card behind

Stop using your credit card for any of the categories that you determined in the step above. If you think you won’t be able to resist the temptation of the plastic, consider leaving your debit card behind for a few weeks to break the habit of using your card.

3. Track your purchases

One way to track your purchase, or keep allotted cash separate from each other, is to use the envelope system. For each category, put a certain amount of money into the envelope and then put the receipts into the envelope so you can see what you spent at the end of the month.

4. Take out cash only at a specified time

Limit the number of times you withdraw money from your bank account. Consider making the trip to the bank on payday. You can also ask your teller to give you your money in the correct denominations for each of your categories.

5. Plan

It’s never a good idea to carry around a huge wad of money with you. Figure out where you are going for the day and plan out approximately how much money you are going to need and bring just that amount with you. This will also cut down on impulse purchases.

6. Limit yourself and adjust accordingly

Don’t continue to spend money once you have gone through your allocated money for a category. If you find that you always have money left over in one category and always run out in another, adjust your money accordingly to fit your spending habits.