Using Cash to Control Spending

Controlling spending has rarely been more important for making ends meet than it is today.  The economy has been going through some changes that have left many households in a shaky financial situation.  This is a scary place to be, thus a lot of people are looking for ways to save money. 

One of the ways that people can do this is to cut back on expenditures that are not necessary is by using cash, rather than a check or a card, to make purchases.  With a paper check or a plastic card, it is much easier for most people to spend because they don’t see the money leaving at the moment that it really is.  They just pull out the method of payment and voila’ they have made the purchase, often not even knowing if they really have the money to cover the purchase. 

There are several ways that you can use cash to control your spending and this article will cover two of them.  The first is to simply get all of your money in cash and then purchase money orders to pay your bills or pay them in person so that you get a receipt.  Using this method, you are going to have to spend a bit of money on fuel costs and/or the cost of money orders and postage to pay your bills.  It will, however, be effective in not allowing you to spend more money than you have.  You will not have bank overdraft fees to worry about, either, and this can save an enormous amount of money for people who are prone to over-spending and being charged these fees.

The second cash budgeting method is using the envelope system.  When you are using the envelope system of budgeting, you will need to first have a budget written out on paper.  Doing this will let you know what you absolutely have to pay each month and when it is due.  You will be able to see what is left over after the monthly bills are paid. 

When you receive your paycheck, put it into your bank or other financial institution and write out the checks for your bills.  Keep your ledger up to date so that you know what your balance is after the bills are paid.  Once this is done, get out envelopes and use these for variable expenses.  These could include things such as, gas, groceries, savings, spending money, and holiday or other special occasion funds that you are saving for.  Label each envelope with the name of what the money inside is going to be used for. 

Put the envelopes that are being saved for something in a secure place, such as a home safe or a separate savings account, as long as you are going to be able to stay out of it.  Keep the other envelopes out or keep them in your purse, briefcase, or other item that you carry with you on a regular basis.  When you want to make a purchase, take out the appropriate envelope and use the cash inside.  When the cash in the envelope is gone, you are done spending in that area.  

It is often difficult to curb spending habits, but in today’s economy, it is more important than usual that households do all that they can to make the money last between paydays.  Using cash as your means of spending can help you tremendously as you will see exactly what your financial standing is at any given moment.  This way, you will know what you have to spend and be better able to decide what you want to spend it on.