When you pay with cash, your brain knows it. If you’re having a hard time regulating your spending, try an all-cash diet. For an entire month, make all of your purchases in cash. Seeing the money float away makes a mark on your brain. It’s hard to see it go, and easier to save.
Why an All-Cash Diet Works
Categorize your spending by methods of payment. How many of your bills are paid with automatic payment? When you shop at the store, do you swipe a card or scan your phone? At the gas station, you probably pay outside with a credit or debit card. You never actually handle the money your spending.
When you don’t see it, touch it, or smell it, a part of your brain fails to register the loss. When you pay in cash, you experience the loss, record it, and remember how it felt the next time you think about making a purchase. You worked hard for that money. Do you really want to see it go away?
How to Go on a Cash Diet
Let’s say that your monthly expenses are $1,200 a month and $400 of that goes to groceries and meals out. Withdraw $400 from your bank account and split the money into four envelopes, one for each week.
When an envelope runs out, you’re out of spending cash for the rest of the week. What about ordering things online? If you spend $50 online, take $50 out of the envelope and set it aside for next month.
What Are the Benefits?
When you need to return something, you don’t have to wait several days for the funds to be returned to your account. The cash diet cuts back on fraud and charging errors. Go old school with your cash flow and get your spending under control!