With the increasing popularity in managing finances with credit and debit cards, some people are finding that they are having a harder time sticking to their budget. It is easy to start swiping the card at the stores without keeping track of how much you are spending, only to find out that you have spent way more than was budgeted!
One solution that can be used is to change over to a cash system of spending. When you are spending cash, you always can see how much is leftover and you will be unable to keep shopping when the money is gone! Here is how I have setup my cash budgeting system:
Start out by setting up the framework for your budget. Get some envelopes and write different budget categories on the outside of the envelope. For example, these are some of the categories that I use: groceries, clothing, entertainment, misc household items, utilities, etc.
At the beginning of each month, place the correct amount of cash in each envelope to match your structured budget. Keep these envelopes with you, and when you spend money make sure that you are pulling it from the correct envelope.
I like to replace the cash with my receipt in the envelope, that way I can look back at the end of the month to see everything that I spent money on. It is an easy way to track your spending, and you can start to see some trends or habits that you have in regards to spending money.
The cash envelopes system is a good way to cut back your spending, because you have to make a very conscious choice every time you pull out the money and count it out at the register. Having the physical cash in hand helps many people to connect with their spending again, and it helps them to avoid mindless spending that ruins their budget.
Tags: budget categories, budgeting system, conscious choice, debit cards, harder time, household items, managing finances, personal budget, spending cash, spending money