There are two items that traditionally keep people from getting ahead financially: income and/or spending. While there are a number of things you can do to increase you income, generally those changes are not immediate. Spending is something you do have immediate control over. With debit cards and credit cards, it’s very easy to overspend. There is a very easy way to curb your spending.
Yup, that is the brilliance of the plan. Put cash in an envelope for the categories you tend to overspend on. One category that we had a lot of trouble with in the beginning was food. It is so easy to overspend on groceries and eating out. Once we started using cash and I had to stare down that envelope, we quickly got our spending under control.
Every two weeks when we got paid, we would take out enough cash for food for the next two weeks. Once that money was gone, we had to make due with whatever was left in the house. I remember one night, after we ran out of money before the next pay day, I made a box of mac and cheese, a box of stuffing and a can of peas for dinner. Did I mention we quickly learned to make that money last for the entire two weeks?
If you are worried about carrying a lot of cash, just carry the cash you need. Only carry your grocery money when you plan to go grocery shopping. This will also stop you from making unplanned trips, which generally lead to overspending. Need to pick up a few things after work? Just take $10 or $20 with you, again to limit impulse items.
What if you buy a lot online? Cash won’t work for that. Well, there are some alternatives.
- Most sites accept Paypal. Transfer money to your Paypal account to limit your spending.
- Purchase a prepaid debit card at Wal-Mart, Target or another local retailer. These are similar to gift cards but can be used anywhere Visa or Mastercard are accepted. Load your budget onto the card. You can reload it when you’ve got more money to budget for that category.
- Use gift cards. If you shop at Amazon or another online retailer on a regular basis, purchase a gift card for that retailer to limit your spending.
- If your bank allows you to have a free checking account, open another account for those spending items and use that account to limit your spending.
These methods to not require you to do extensive budget tracking, but can help you save a tremendous amount of money each month. Give it a try. You’ll be amazed how easy it can be to curb your spending.