Here’s a brilliant system for managing money: use weekly cash.
Are you trying to figure out how to get organized with your money? Do you get suckered into going to one-too-many fancy pants brunches to find yourself constantly overspending?
Well, I have a solution for you: use cash only.
Using cash only for your day-to-day purchases is a brilliant system for managing money.
People swear by using credit cards for all their purchases to earn points or frequent flyer miles. Using credit cards for points is fine and dandy except for the fact that:
- American’s owe over $1 trillion in credit card debt (a record high since the Great Recession)
- Those with credit card debt owe on average $15,799 according to creditcard.com
- If you happen to be the 35% of credit card users who pay off their balance (65% don’t), studies show you spend 12-18% more swiping a credit card versus using cash
- A study showed the biggest reason for credit card debt is simply availability of credit
My secret weapon for managing money throughout the month is to use cash.
Here’s how exactly I use cash only for my day-to-day purchases.
The purpose of using cash is pace your spending in areas that people tend to overspend: groceries, restaurants, happy hours, gas for your car, small gifts, clothes, and entertainment.
For example, you’d withdrawal $100 for eating out for the month, $300 for groceries, $40 for happy hours, $60 for movies and entertainment, and $140 for gas.
I simplify this process by taking out a set amount of cash for all of your day-to-day purchases in a week, versus separating cash into envelope or jars.
I call this system: weekly cash.
For almost a decade, I’ve personally taken out $120 cash a week for groceries, gas for my car, entertainment, etc. It’s worked like a charm.
Here’s what I normally spend with weekly cash:
- $20-$40 a week on groceries
- $20-$40 a week on gas for my car
- $40-$80 other: entertainment, happy hours, eating out, clothes, or small gifts
Here’s exactly how I spend $20-$40 on groceries each week. I also have posted Meals of the Week with exact meals that I love making like this Buffalo Chicken Salad or Quick Philly Cheese Steak Sandwich.
Of course, I don’t use cash to pay my car insurance or cell phone.
I automate my fixed expenses and pay those electronically. FYI, automating your fixed expenses is the laziest follow-through formula to ensure that you invest monthly for retirement. For the one-off larger flex expenses that vary from month-to-month like buying a flight, reserving a hotel, or paying for a surgery I use my debit card.
I use cash only for the day-to-day expenses, or what I consider as CFO to be basic regular operating expenses.
Why using cash only is a brilliant system for managing money.
If you have a set amount of money, then you’ll automatically pace your spending throughout the month and avoid impulse purchases.
With weekly cash, when it’s gone, it’s gone.
Using cash for your day-to-day purchases allows you to spend more on what’s important to you. For me traveling is important- here’s how I’ve traveled to over 20 countries. One of the ways I’ve been able to pay for international trips is from pacing my spending with cash. After all, would you rather go out to eat everyday for lunch or take a 21 day-trip to Asia?
Weekly Cash is too legit. Too legit to quit.
Yep, I’m a child of the 80s and MC Hammer fan! Weekly cash is a legit system for managing money that I truly hope you’ll try out. For newlyweds, it’s great because it helps getting on the same page with money. Here’s a story of why one newlywed couple switched to a cash budget.
Weekly cash is a brilliant system for managing money, but it will take time getting used to.
Experts say it takes at least 21 days to form a habit. Try weekly cash for at least three weeks, and once you get the swing of it, it’s too legit to quit.