One of the most important things you can do in a prolonged economic downturn is really get a hold of your finances. Really get a hold of your spending. You’re going to have less to spend on the stuff you need so discipline and strategy is important.
Moving to a strictly cash budget has been the secret to gaining hold of our family’s finances. There are just too many things that feel like necessities when they feel like an option, too many meals we’d rather eat out when there is plenty of food in the pantry and too many “small” things that add up big time on a credit card statement and end up blowing you way past your monthly income. Credit cards allow for this nonsense to continue until you are drowning in debt. Cash does not. I had pushed back on my husband urging me to move to cash only because I knew how much of a reality check it would be on my spending. When you take $50 to the grocery store, you have to look at prices and plan meals out wisely and somehow $7.00 pine nuts don’t seem as crucial to throw in the cart. The same goes for all other arenas of shopping–hitting the mall and picking up a few “small things on sale” just doesn’t seem as innocent when you are shelling out half of the cash from your monthly envelope. Using cash has revolutionized my perspective on the value of money because I see it as finite and make wiser, more frugal choices. With the new ability to see the money leaving my hand, I am not above browsing thrift shops because I realize how ridiculous it is to blow such giant portions of our family income on clothing and frivolous items that we don’t really “need”. Here are a few tips to making your family’s switch to cash successful:
1. Budget with Envelopes – Team up with your mate to take a sobering look at how much money you bring in every month and decide how much of it should go to each spending category that you typically end up charging on the credit card (food, household items, entertainment, miscellaneous etc). Create envelopes at the beginning of each month and take out the exact amount of cash you want to spend in each category and fill your envelopes.
2. Plan meals and do not deviate – Food seems to be a significant portion of family budgets, especially if you are accustomed to piling up that grocery cart every week and still going out to eat frequently. This is wasteful as most of us throw out half of the food in our refrigerator and spend way more than necessary in the food department. Plan out the weekly meals before your grocery trip each week and only take the amount of money to the grocery store that you plan to spend. Decide as a family to eat your leftovers the next day, get creative with what is in the pantry and if you stick to your plan all week, plan for there to be enough money left for a special weekend meal out as an incentive!
3. Shop Smart - It’s amazing how my switch to cash has instantly made me a more thrifty shopper. I see now what a retail snob I was and how unwise and destructive to my marriage it was to live that way. Paying more for my jeans does not make me better, skinnier or prettier than anyone else – it just makes me a fool in debt. I now enjoy searching for “treasures” at consignment shops and take pride in the fact that my family is clothed and looks great without my husband and I having to fight about the bills. We spend what we have, and if we don’t have money for it than we don’t need it. It’s as simple as that!