Cash is King

For a long time I was a major user of a debit or credit card tied to a bank account as my primary manner for daily purchases. It was so quick and easy to make the purchases I required without having to carry a cumbersome wallet stuffed with bills. With online tools nearly instantly able to track these purchases, it also felt easy enough to maintain a balanced checking account. Over the past year, however, I have come to believe that cash is king.

When my wife and I created our budget last year, we also made a commitment to using cash as much as possible. We now withdraw a set amount of cash for spending for each week to cover groceries and other household expenses. Other bills are paid electronically directly from our bank accounts. If additional cash is needed, we must make a special trip to our bank which we intentionally selected because it is located half way across town. Unplanned spending has to be thought out and truly desired, because it is requires work to get the money to make that purchase.

This plan has had a powerful effect on our finances. In that one year we have been able to save almost 15% of our pre-unemployment income even though I have only been employed for half that period. Impulse spending has been limited to only the cash on hand, greatly limiting the amount of money that slips away outside our awareness. And, as mentioned in a previous post, there is actually a feeling that we have more freedom around this cash than we ever had using credit and debit cards. We no longer have to be concerned that the money we are spending is meant for something else. If we choose to spend additional money on something, we have to actively remove money from another source and consciously make the decision to do so. Our financial awareness has increased greatly by using cash.

If you ever get the feeling you don't know where your money goes each month or why you continually are living paycheck to paycheck, consider using cash as much as possible. Combined with a solid budget, using cash has incredible power.

Cash is king.


Post a Comment

Real Time Web Analytics