Try A Weekly Cash Budget

Money 2Cash seems such an old-fashioned idea these days, with credit cards, debit cards, internet banking and even cheque books. Yet spending cash only has been the timeless advice of financial gurus. I was a big fan of the cashless lifestyle, until I decided to try a weekly cash budget just for fun. I was amazed at the result.

photo credit: borman818

1. You can feel, hear and smell cash

When it comes to managing your money, you want all the help you can get. Using cash engages four of your five senses and thus fully engages the brain. You see the notes and coins, you touch them in order to use them, you hear the rustle of the notes as you count them out, and you smell them even after they’ve left your hands. Your brain is going to register all these much more strongly than it will register your credit card statements or internet banking page, which engage only the sense of sight. The strong impressions of the combined four senses will send powerful signals to you about how much you’re really spending.

2. Cash is finite
When you charge your purchases to a card, the dollar amount doesn’t really matter because your card can take almost any amount within your credit limit. When you use cash, on the the other hand, it is very painful to see how empty your wallet or purse looks after you’ve pulled a wad of notes out to pay for your purchase. That pain will help you to walk away from the (usually unnecessary) purchase for the sheer relief of being able to stuff the notes back into your purse. The other thing that will help you buy less is that fact that towards the end of the week, your wallet is going to be rather empty anyway and you will have no choice but to walk away from many temptations.

3. Using cash makes you feel rich

This alone is a wonderful reason to spend only cash. Signing a $100 purchase to a card is no big deal. Pulling out two crisp $50 notes and placing them on the cashier’s counter is an entirely different feeling. It’s the feeling you get when you play Monopoly and dish out paper money without a second thought. Only this time it’s for real. Trading in cash is the domain of the wealthy. Success experts consistently say that if you want to be rich, act rich. This positive affirmation in actual action will eventually convince your brain that you are rich and it will start to steer you towards rich actions that will make you a rich person. When you use cash, you are becoming rich already.

4. Stashing cash is easy

If you have a big ticket item that you need to buy in a particular week, it’s easy to fold up $100 dollars in your wallet or put that $100 in a separate compartment. This makes it very clear how much you really have to spend on everything else like meals. It also ensures that your big ticket items like birthday gifts are taken care of without postponing the pain of paying for them to when your credit card bill arrives. Apart from the obvious budget benefits, you’ll feel proud and smug when you give the present knowing that it’s already paid for, rather than giving it with a twinge of guilt knowing that you’ll have to pay for it later.

5. Your bank account grows

This must surely be the most compelling reason to use cash. When I used to charge everything to my debit card, I had to check my bank balance everyday day towards the end of the month just to make sure that there was enough left for the bills. If there was enough for the bills, I had to calculate how much I could splurge on luxuries. If you do the same, you will feel like I did – that you’re a hostage to your bank account. You’ll join the majority of the world who are slaves to money, rather than belong to the small minority who have mastered the money game and are masters of their finances.

6. Be a master of your finances

Use your weekly budget to set you on the path to mastering the money game:

a. Figure out how much you can comfortably spend each week after accounting for bills.
b. Withdraw this amount on the first day of the week.
c. Set aside what you need to spend that week on big ticket items.
d. Spend the rest.
e. Live on love and fresh air when the cash runs out.

That last bit is crucial. The first few weeks I tried this, I had no more cash for the last day or two of the week. It was tempting to withdraw some more cash. Instead, I stayed home and learnt to cook simple dinners from whatever was left in the fridge, instead of going out to buy a meal. I learnt to enjoy free walks in the park instead of loitering in shopping malls where temptations to spend money were everywhere. My health and spirits improved tremendously.

The good news is, after a few weeks of struggle, I reached the point where the cash not only lasted the week, but there was usually extra cash left when the next week began. You see, when you give your brain the instruction to make it through the week on a certain budget and show that you mean it, it will obediently adjust your thinking to help you achieve it.

So if you want to feel and be rich, start living on a weekly cash budget. Try it for a month and decide if you want to continue. I’ll bet whatever cash is left in my purse at the end of this week that you will want to.

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Posted by Daphne | September 14, 2008 | in Give Freely


7 Responses to “Try A Weekly Cash Budget”

  1. Carnival of Debt Reduction #159~They Never Said It Edition | On a Quest To Be Debt Free...
    September 29th, 2008 @ 7:25 pm

    [...] Lim presents Try A Weekly Cash Budget posted at Joyful Days.Cash seems such an old-fashioned idea these days, with credit cards, debit [...]

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    September 30th, 2008 @ 1:05 am

    [...] #8 submission is Try A Weekly Cash Budget Thanks Joyful [...]

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    September 30th, 2008 @ 1:35 pm

    [...] Joyful Days suggests trying a weekly cash budget. [...]

  4. Until Debt Do US Part
    October 2nd, 2008 @ 7:35 pm

    Great post and great advice.

    For me point number five is what going a cash only budget is all about. I too have experienced the pain of thinking that my bank account balance was X only to find out that it was X minus a big Y. Painful – very painful.

    The beauty about operating cash only is that you are forced to budget and forced to exert great self control and discipline.

    Until Debt Do US Parts last blog post..Gambling debts – the last place you want to be

  5. Daphne
    October 2nd, 2008 @ 11:58 pm

    Thanks, and I like your blog name! Clever pun. I visited the blog and you have really good content, well worth reading.

    I agree that life is much more fun when you know you have enough in your bank account for anything that can happen. I never agreed with the traditional from of budgeting ie tracking every single expense. Too much work for me. But this cash thing is simple and works great!

  6. Amanda
    January 14th, 2009 @ 3:47 am

    Question: What do you do with your left over money at the end of the week (if there is any?) For instance you take out $80.00 on Sunday and your left with $20.00 by Saturday. Do you put that in the bank and pull out another $80.00 on Sunday?

  7. Daphne
    January 14th, 2009 @ 11:06 am

    Hello Amanda,

    Welcome to the Joyful Days community! I don’t put my leftover money back in the bank. Usually I just roll it over to the next week, or buy something nice for myself or a loved one.

    The rationale is to save what you decide to save, and spend what you decide to spend. It’s a great feeling, psychologically, to have money at the end of the week that you “must” spend. In this way, you don’t begrudge the money that you must save. If you put the money back, I’m sure there’ll be a temptation at some later point to spend more than the week’s cash budget and reason to yourself that it’s ok since you put back some earlier. This bargaining with yourself has been the downfall of many longterm plans to wealth.

    Hope this answer makes sense. Thank you for your comment and allowing me to elaborate on this!

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