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I’m in the home stretch of my cash-only budgeting month and have four days before I can go back to using my credit card. What sweet relief!
Sort of.
I’ve come to appreciate cash for what it’s taught me. Using cash is messier and makes individual purchases harder to track, but it is easier to remember how much money I’ve withdrawn than to remember how much I’ve charged. If I forget, I can add up my ATM withdrawals online in less than a minute.
I am more conscious of how purchases add up as I contemplate them in the store. I am paying greater attention to prices because I am hyper-aware that what I buy today takes away from what I can buy later. With credit that seems less true. I am also scared of putting more into my cart than I can pay for. How embarrassing to not be able to pay the cashier and have to put something back. This means shopping takes a few minutes longer as I’m tracking the price of everything in my cart, but it is a cinch to stick to my list. During my last grocery trip, I took two items off my list even though I had enough money to pay for them!
Almost everyone takes cash, but there are exceptions. Some airlines do not take cash for in-flight purchases of snacks and drinks. Rental companies often require a credit card to place a hold in case you damage or lose the equipment.
Big purchases are easier with credit. With plastic, you don’t have to stuff wads of bills in your wallet and ask the cashier to count out high sums. If I lost my wallet, I have no recourse other than hoping an honest soul returns my wallet untouched. With credit I am well protected.
Cash has changed my spending habits the most when it comes to purchases under $50. Most of my big purchases, like a plane ticket to NYC for my sister’s graduation, are unavoidable because I am committed to celebrating her accomplishment in person. But the small purchases – like whether to order another drink at the bar, or whether to stock up on groceries – come with wiggle room. Using cash makes me more likely to wiggle my spending downward.
So how do these lessons add up this month? I am on track to spend $1,000 in April, which is well below my target of $1,200. My total spending does not include a $533 mattress, for which I used savings. I have four days left to go so keep your fingers crossed I will make it to May without going to the ATM again!
April 27th, 2010 at 3:38 pm
When the experiment is over, will you go back to spending as before or will you make some changes? Either way, why?
April 27th, 2010 at 5:30 pm
It’s obvious you’ve given a lot of thought to the lessons learned during this cash-only month of budgeting, and you seemed to have gained some valuable knowledge. I look forward to seeing your reply to Diane’s good questions.
I’m still a mainly cash shopper/buyer, as I know it helps to keep impulse buying in check. That’s usually not true when credit cards are involved. But what works for me may not work for others.
April 27th, 2010 at 5:42 pm
Good for you to keep to your budget, if times ever get really hard, you know you can do it! congrats
April 27th, 2010 at 5:42 pm
You mention that it’s hard to remember how much you have charged but most credit card sites update their sites pretty quickly with purchases and you can use a site like mint.com to bring all of your ATM/bank, credit card, and other financial accounts together into one place.
April 27th, 2010 at 11:38 pm
OMG! I think you’re so brave for going without credit cards even though you’re so right. Every time I know a store won’t take credit I think so much harder about whether to buy something or not and more often than not I put the item back unless I know I really really really needed it whereas with credit I just buy! Now I want to give this no-credit experiment a go as well! Good on you! Can’t wait to read how the home stretch of this experiment goes!
April 28th, 2010 at 6:01 pm
Why not try to see how long you can keep (say a 20) in your wallet without spending it? By “playing the game” with yourself you are forcing yourself to think before spending anything. (do I need it or do I want it)
April 29th, 2010 at 10:04 am
I can see that a one month trail would lower your spending but after several months, cash over credit may not change your money habits. Are you willing to try for one year?
April 29th, 2010 at 11:26 am
@Junie Good point! One month is hardly a long-term indicator of how spending only cash would change my financial habits. I am not willing to give up credit cards for an entire year, however. Partly because I would never be able to buy a plane ticket to see my family!
April 29th, 2010 at 12:27 pm
Over the years, I’ve found that sticking to a mostly cash-only plan works well. It does take a bit of time to shake out the weak areas, but works out in the long run. I use a CC when it’s required for certain transactions (such as buying airline tickets on-line or taking the FlyAway to LAX), but do not use them for daily purchases. It does require some advance planning, and sticking to a shopping list, but it’s worth it. Of course, it’s always a good idea to have an extra $20 tucked away for “mad money”… or that drink at the bar! :O)
April 29th, 2010 at 1:40 pm
[...] month-long cash-only experiment has taught me a lot about money. I dipped into savings only once, and that was to cover a $533 emergency mattress purchase. [...]
April 30th, 2010 at 7:15 am
[...] Diane sent me a darn good question via a comment on my post about approaching the end of my credit card ban. “When the experiment is over, will you go back to spending as before or will you make some [...]