After following the debt free community for a while, I decided I was going to try a “cash only” month. I use credit cards for pretty much everything. It works for me. I have never had credit card debt and have ALWAYS paid off my credit card in full. I have never paid one cent of credit card interest. I am not saying credit cards are for everyone but when used correctly they are a great tool. The only bills currently I pay straight from my checking account are my rent, electricity bill, and gym membership. Everything else is paid with a credit card.
I wanted to do a “cash only” month to see if I save more money and if I learn anything new about my spending habits. I know I spend a lot of money eating out and on random purchases so I want to see if using cash will change that. I put “cash only” in quotations because I will not be using cash for everything. I will be using a debit card for some purchases because sometimes cash is just annoying in my opinion. I am hoping my debit card still works because I haven’t used it for a purchase in years (no joke). I had my debit card hacked 3 years ago and haven’t used it since then except at the ATM.
Below I am going to explain how I am preparing for my “cash only” month, what I will be doing, and tips for you if you want to try a “cash only” month.
How to Prepare
Create a Budget:
First, you need to decide how you will be creating your budget and what categories you want to use cash for. I am using the Budgeting Worksheets from A Sunny Side Up Life. I do use an excel file to track my spending (and will continue to do so during my “cash only” month) but I love these budgeting worksheets and want to keep them with my cash envelopes. I have been using them for 2 months now and they have helped me so much.If you want to purchase them click here. You get 14 worksheets that you can print or use in Google Sheets. Some of the sheets are bills, spending, savings, sinking fund, debt, and net worth. If you need help creating your budget make sure to check out Sami’s budgeting course, Your Sunny Money Method. I completed this course a few months ago and wrote a full review of the course so make sure to check it out. Sami’s budgeting worksheets are included in her budgeting course and she walks you through how to use them.
Decide Your Cash Categories:
Look at your budget and review what categories you normally overspend. For me, it is groceries and eating out. It is SO hard for me to resist the snack aisle when grocery shopping. I am obsessed with goldfish and pretzels. Groceries and eating out are the two categories I will be using cash envelopes for. Most of my bills I pay online so there is no point of using a cash envelope for those. Be realistic. If you know you won’t stick to cash for a specific category, don’t make that one of your cash envelopes. For example, gas. I will not go inside and use cash to pay for my gas. It is an added step and is super annoying to me (especially if it’s raining). Maybe that makes me a diva but I know I will not go inside and pay for it so instead I am going to use my debit card. I normally use my credit card so it is still using “cash” to me.
Decide What You Will Use for Envelopes:
I get paid every two weeks so I will use my budgeting worksheets to create a budget for each pay period. The way the worksheets are set up makes this super easy. I do not want to carry around a ton of cash because it makes me nervous so I will be using the below clear pouches for the total amount of cash I need for the two week period and then the below clip-flags for the cash I need that day.
The clip-flags I will put in my wallet and carry for the day. This helps me stick to what I am supposed to spend that day and also reduces the risk of me losing a ton of cash. I love these because they are paperclips with the tabs so you can still label what category it is for. It comes with 24 so you can probably share with a friend or family member.
What My Month Will Look Like:
Cash: Groceries, Eating Out
Debit Card: Gas, Nails, Graduation Gift, Mother’s Day Cards, Internet, Therapy, Starbucks
Automatic Checking Account Withdrawals: Rent, Energy Bill, CRU donations, Roth IRA
Credit Card: Netflix, Hulu, Season Tickets Payment, Gsuite
You might be thinking wait I thought this was a cash only month and you are using a credit card? My Netflix, Hulu, Gsuite, and Gamecock tickets are on payment plans on my credit card and I do not feel like changing it for one month and then changing it back. I know what day they are charged to my credit card so my plan is to leave the money in my checking account and pay it as soon as it hits my credit card. Those are the only purchases I will use my credit card for which is nothing compared to what I usually spend on my credit card. If I decide to do this longer than a month I will change them to my debit card.
Since I normally use my credit card for all of the cash/debit card categories, I will miss out on credit card rewards. I have a cash back card I use currently for gas and groceries since those categories have a higher cash back percentage. I have a travel rewards card that I use for pretty much all other purchases so I can save my travel rewards for my honeymoon. I am going to try to track how many points I am missing out on by using cash. This way I can accurately compare how much extra I am saving (if I save more) compared to how many points I missed out on.
Tips for Your “Cash Only” Month:
- Plan and Prepare: Do not just decide next month you will use cash and not plan. I have been planning and preparing for a few weeks now. You might only need a week to create your budget, decide your categories, and plan but give yourself some time. Change takes time and preparation.
- Don’t Worry About What Everyone Else Does: Some people use cash for all categories, some use envelopes, some use clips, etc. Who cares. Do what works best for you and your budget. You know where you overspend and what is realistic for you.
- You Don’t Need to Use Cash for Everything: Start by using cash for the categories you overspend. That is what I am doing. If that works and you want to expand to other categories then do it.
- Adjust If Necessary: Set your budget, amounts, and categories and if halfway through the month you realize it is not working then adjust it. Do you need to add a category? Are you spending too much? Review what you are doing and adjust if necessary.
- Set Goals for the Month: Before you start your cash only month set a few goals. Do you want to save more money? Spend less eating out? Learn about your spending habits? If you write down goals you are more likely to stick to them. For me, I want to spend less eating out and see if I save more by using cash/debit instead of my credit card.
What other tips do you have for a “cash only” month? Do you use cash or credit cards?