How a cash-only budget can help your finances?

Are you a buyer of impulse or credit card debt? A single budget can help.

Traditional budgets often require great discipline. If you spend too much in most budget categories, this could be a sign that you should change the type of budget you are using.

A cash-only budget can be a great way to keep costs down so you can work toward many financial goals.

Here’s a brief overview of how a cash-only budget works and how it can benefit your finances.

How the cash-only budget works


As you might have guessed from the name, a cash-only budget involves using cash for all your spending needs. No credit or debit cards are allowed. Checks also came out.

The cash-only budget is usually paired with an envelope budgeting system, where you have an envelope for each of the categories in your budget. You can only spend the money you have in those envelopes in a month. When you make money, you’re done.

It is a good idea to have a basic budget before you start making cash as this involves withdrawing the only amount of cash and distributing it to each of your envelopes at the beginning of the month.

Using cash has a positive impact on spending


The biggest benefit of using a cash-only budget is that you are usually motivated to stick to your budget as you begin to cut money.

There is also something powerful about handing over cash from clearing your card, and research has shown it to be true.

Think about it: do you enjoy seeing the number of bills you carry around a psychiatrist? Probably not. It is better to physically hand over cash than it is necessary to swipe a card.

The psychology behind this method of budgeting should not be neglected. It is much more important than checking in with your spending through budgeting software or manually tracking it in your browser because you feel pain at the moment.

The sooner you can stop spending, the better.

A cash-only budget can help speed up debt payments

The cash-only budget is fantastic for people who are in credit card debt. If you are unable to stop withdrawing your card, then holding on to the money can help create better spending costs.

Plus, you can use good spending habits that you develop to pay off your debt faster. Keeping a budget on a regular basis and getting control of your spending can mean “finding” extra money, which means it will be able to pay off debt faster.

You are forced to think twice about buying

Impulse buyers can benefit from a cash-only budget, as having a limited amount of money makes you question all your purchases.

For example, say you are nearing the end of the month, and you only have USD 20 in your grocery budget. You know you have to make the most of USD 20 to have enough food to stay for the rest of the month, so get creative with your meal. Before embarking on a cash-only budget, you may have been tempted to throw whatever food you wanted in your cart, which results in exceeding your grocery budget.

Having this built-in barrier to spending distracts you from any impulse purchases you may want to make.

You literally have no choice but to be smart about how you use your money, or at all risk not having enough money for your needs.

You are discovering your priorities and missing a budget

After using your budget for just a few months, you will probably recognize your weak points.

For example, you may find that you are tempted to spend more on clothes and have no problem sticking to your gas budget. Or you may find that you are using every last dollar in your nutrition budget because it cannot resist stopping fast food.

Under normal circumstances, you may not think twice about these budget leaks. It’s just another month where you end up spending more than you thought, right?

However, with a cash-only budget, you might be thinking deeper about why you feel the need to spend more in certain areas.

Will shopping or eating matter to you? More important than your other goals?

Carrying some cash can help

The small benefit of carrying cash is that it is appropriate in certain situations. Those who never carry cash can face these problems:

  • You need to spend a minimum amount of money to use a credit card in some places (usually food establishments)
  • In some cases, there is a premium for using plastic (sellers may charge an additional processing fee)
  • You may not be able to offer advice (in some places money tips are only taken)
  • You need to find an ATM in your network. Otherwise, you are facing a refund.

Although these problems seem small, these examples can be added. It is always good to spend some money on you to avoid ending up in these situations.

Developing affordable spending habits pays off

Transforming your spending habits by going cash-only eating can pay dividends down the road. Habits are all about your money, and once you figure out how to gain control of your spending, you’ll probably never go back to your old ways.

A cash-only budget is a great way to reduce spending habits and replace them with ones that will lead you to a secure financial future.