How to Get Started with a Cash-Only Budget

If you have trouble staying on budget because you overspend in certain categories, you can get started with an all-cash budget to help you keep your spending in check with these tips for getting started with a cash-only budget.

If you are having a hard time getting out of debt because you are having a hard time sticking to your budget, switching to a cash-only budget can help you stop your spending when you run out of budgeted money.  If you don’t have cash for a purchase, you just can’t buy it!

Here’s how a Cash-Only Budget works:

Each month (or pay period if you don’t have enough cash for an entire month), pull cash from your account for your variable budget categories like groceries/household goods, gas, dining out, entertainment, clothing, kids activities, blow money, etc.

Separate your cash into envelopes by budgeted category.  When you make a purchase, pull out your cash envelope and pay cash.  When the money is gone from your envelope, you are done spending in that category.  Don’t be tempted to borrow from your other envelopes.

You likely have fixed expenses like your mortgage/rent, utilities, debt payoff, savings, etc.where it doesn’t really work to pay with cash.  Leave that money in your account to pay those bills directly.

If you’ve never used a cash-only budget before, it might take some getting used to.  Give it a couple of months before you declare it a success or failure.

Benefits of a Cash-Only Budget:

  • You spend less – It can be more painful to make a purchase when you have to hand over hard-earned cash, rather than a debit/credit card, so you may end up spending less money by using cash.
  • You know when to stop spending – If you have trouble spending more money than budgeted, having a cash budget helps you know when to stop spending.  When your cash is gone, you can’t spend any more money!

What about you?  Do you have an all-cash budget?  How did you get started

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