Several years ago, when our kids were pretty little, we were in line in a grocery store with a cart full of food for our growing family.
After ringing everything up, the total was just under $200. As I pulled two crisp $100 bills out of my purse, I glanced at my oldest child and saw her eyes open wide and her jaw drop.
“Mom, you have two hundred dollars in your purse??”
I smiled and said, “Not any more!” Even in her young age, she connected the emotion of paying for things with cash. See, the times I paid with a plastic card, she didn’t notice. She could see the bill and the total, but there was a disconnect that it was real money. It doesn’t look like real money.
That disconnect is there for adults too.
We feel different when we spend cash verses spending with a card. Do you feel it? Physically handing over cash and then seeing less in your purse or wallet hurts more.
Plastic is too easy to swipe. In fact, research shows people spend about 18% more when they spend with plastic as opposed to cash. It’s just too easy to add in an extra item.
So, after my post last week about not having a tv, here I am writing a post about not having a credit card. No, we’re really not Amish.
But it’s true, we do not have any credit cards – and no credit card debt either.
However, we do have a debit card for our checking account. But since you can only spend what you have in your account, there’s never a debt attached to it. The debit card is really just for gas and occasional things.
In our budget, we use cash most of the time for any food or household expenses. We take our budgeted amount of cash out of the bank every two weeks.
When the cash runs low, we stop spending. Crazy, right?
Using cash instead of credit requires a plan. We know what we need, and we know what we have in the fridge to use up. We don’t go in a grocery store without a plan.
Having a plan (whether it’s a weekly meal plan, or just a simple well thought out grocery list) keeps us from overspending.
If the cash runs out before the week is over, meals can start to look pretty interesting. We’ve been known to invent some thrown together meals in order to use up what we have instead of buying more. And that’s ok. In fact, that’s great!
If we had a credit card, it would be far too easy to say, “I’m out of xyz, so I’ll just pop over to the store and I won’t spend too much.” I’d probably spend more than I intended (anyone else ever do that?) and I’ll promise myself to pay off the bill when it comes, but then it happens again and again.
Pretty soon I can’t pay off that bill every month. And now I’m trapped in credit card debt paying for food I ate a month ago.
No thanks! Using cash helps our finances stay on track. Wise planning, well thought out shopping, and saying “No” once in a while are good things.
So how can you get out of the cycle of using credit cards?
- Start by talking with your spouse. Talk about your financial goals and dreams. Owing money for food that’s already gone will not help with achieving those goals.
- Make a monthly budget. Budgets are a good thing. It’s not a punishment, and it’s not a bad word. Like Dave Ramsey says, “A budget tells your money where to go, instead of wondering where it went.”
- Know how much you can spend for food. Just start with using cash for this category. Here’s a tip – overfund this category. If you think you’ll need $200 per paycheck, budget for $300 just in case. People really spend more than we think in this area, so be careful, but be realistic too.
- Use up what you have. Take a week or two and just use up the things you already have in your pantry. Usually, there’s more in there than we think. Get creative!
- During this time, set aside what you would’ve spent on groceries as a small emergency fund. Saving money for emergencies instead of relying on credit cards will help you to stay away from creating new debt.
Using cash allows you to feel and see what you’re spending and how much you have left. It’s a great help when we’re tempted to overspend. I don’t want to get up to the checkout and have to put something back because I went over my cash amount. I keep better track of what I’m doing.
How about you? Do you use cash to keep track of spending?