Hello, and welcome to the final budget tip in this series. I know, budgeting posts may not be as exciting as sky diving or white water rafting posts, but I firmly believe that people (and even “young adults”) can take control of their finances and quickly enter a debt free lifestyle. And although that may not give you the rush like jumping out of a plane or bouncing over frothing water would, it will give you the peace of financial freedom (which is officially equivalent to five or more sky diving sessions).
I typed this dramatic preamble to lead to a simple concept: The Cash System. Here are a few reasons why I think it works and why it’s worth trying out! The general principles below come from common sense and the guidance of Dave Ramsey. Check him out; his book “The Total Money Makeover” is a great resource for no nonsense money management.
Easy to keep track of your moolah
Every other Friday, my husband and I pull out a certain amount of money. We are expected to live on that amount of money till the next “Cash-Money” Friday. Once the money is gone, we are done spending. It’s that simple. We leave ourselves very little reason to use our debit card between Cash days. (Note, I did not say credit card. We don’t even have one of those! Extreme, I know). We use this cash for groceries, gas, minor car maintenance (oil changes, etc.), clothes, haircuts and fun (movies, eating out, putt-putt golf — you fill in your own fun blank here).
Using this technique, you can emerge from the shadowy land of over-drafting your account, buying a McDonald’s meal on your card, digging through your car seats to find all those crumpled receipts and generally wondering where all your money goes.
Oh, no! You will be in control, baby.
Simple to separate
The key to TAhe Cash System is separating your money into different categories. Once we get out the cash, we separate it into different pockets of a cool miniature expanding file envelope (You can find them at Wal-Mart). Okay, it is not cool at all, and you may feel really dorky bringing that thing out at restaurants and stores, but believe me, it is ultimately worth it. I separate the money into week one groceries, week two groceries, gas and fun money. I then give my hubby his personal fun money and stash away my own. This is where it gets fun (fine, that’s a relative term here).
Say one week you don’t spend as much as you budgeted for groceries. Well then you can plop that extra money right into the fun money slot. You can go out for an extra date that week. Or maybe, if you are really disciplined, you can start a Christmas or vacation fund. Every little bit counts, and before you know it, you may have enough cash for all Christmas purchases. So while all your friends are belly aching about their credit card bills in January, you will try your best not to be smug as you explain the beauty of The Cash System.
Harder to spend
This is a mental thing, but for most people, it’s harder to fork over cash than to swipe a card. When you hand over bills you can see your money supply dwindling. This view allows you to take a second and assess if you really need those pork rinds or that (insert your own tempting item here). The thought of having money to bank at the end of the two weeks is ever-alluring, and it will make you think about each purchase. I guess the cash system makes money real. It changes it from this pretend currency that magically comes from an overflowing spring activated by your card into a precious and limited commodity that needs to be used thoughtfully. Deep, I know.
Ok that is enough (see, I budget my words too!). I hope that I’ve inspired you to go buy that awesome money divider thingy, and try your hand at The Cash System. Best of luck as you embark on this common sense, proven, and ultimately fun system!