Having worked a few retail jobs in the past (and currently on the side!) it has always amazed me how few people use cash to pay for their purchases. Even for a cup of coffee, it’s common to see people whip out the plastic – credit or debit.  In the near future, Google hopes that you will pay for purchases with your phone!  With the plethora of options now available to us to complete daily transactions, how can one possibly keep track of how much has been spent?

Why use cash?

Every paycheque, I determine how much money I have to spend and I take that money out in cash. By taking out cash, I can easily see how much money I have left.  I don’t have to worry about remembering to leave enough money for bills and I don’t have any embarrassing moments of card refusal.  Most importantly, eliminating credit and debit cards from my daily transactions has both saved on transaction fees and also made sure that I always have money left in the bank.

How to use cash as part of your budget

If you want to implement this strategy, here’s how you do it:

  1. Find out if you are paid bi-monthly (twice a month) or bi-weekly (every second week). I am paid bi-weekly.
  2. Determine how much money you want to spend each month if you are paid bi-montly, or every two weeks if you are paid bi-weekly. I give myself $150 per paycheque.
  3. Divide you allocation by the number of Friday’s in the month (bi-monthly) or by the number of weeks between paycheques (2, bi-weekly). I take out $75 each Friday.
  4. Spend your cash. When you run out, no more spending until next Friday!

I split up my spending money per week because if you do blow all you money in one weekend, you only have to wait through one week before getting more money.  Friday is a great day to take out your spending money because it ensures you will have some money for the weekend.

I really was a skeptic when I first adopted this idea.  It seemed like a lot of work – trips to the bank, cash to carry around… But after  a while,  I realized that carrying cash reduced the amount of work and stress I had.  I no longer had to periodically check my balance to see how much I had.  I no longer had to track my spending meticulously with receipts.  By carrying cash, these things are all implicitly done for me.

It really is a great way to stick to your budget – I encourage you to give it a try.