There is a trick when it comes to never overspending. Many experts have their own ideas. You have probably read tips from other money saving bloggers as well.
I have my own idea behind this. There is one trick that I swear by and I never overspend. Ever.
Want to know what it is?
Yep. That is my trick to never overspending! If you think about it, if you use cash, you can’t overspend, right? After all, if you have only $100 to spend, you can’t spend $101. It’s impossible, right?
By doing this, we never overspend. We never go over our budget. For us, it is not an issue of discipline, but more a matter of truly exercising self-control. We think twice before we shop. Sure, we could use a credit card. However, we choose to allow the finances to dictate our spending instead of plastic allowing us to go over our budget (even if by only a few dollars).
I do agree that not all ideas work for everyone, but here are reasons why it is best to use cash (and what to do to make it work). I always like to challenge someone who says that they could “never live on a cash budget” to really try it.
Track Every Penny
You need to keep track every cent you spend. If you get cash and just use it as you please, without tracking it, I agree that it is very easy to go through it quickly.
However, if you keep it in envelope and mark it for the item intended (example groceries), and then write down the amount you spend, you will be able to track how you are doing your spending. You also know how much you have left.
This helps you think twice about that extra latte or new pair of shoes you want to get. If the cash is gone – you can’t buy.
Read more: How to Create an Envelope System
When you use cash for major purchases, you can negotiate prices. This is something that many do not realize. When stores price items, such as televisions, they mark them up to cover the credit fees they must pay for accepting your credit card. When you pay with cash, the store doesn’t have this additional charge.
My husband and I did this when we purchased our new television and stand for our skill.room a couple of years ago. We saved the money and went to a local store. We found the items we wanted and I simply asked him what deal could they offer me if I paid them in cash. Not a check. Not a debit. But cold. hard. cash.
He left and asked his manager and came back with a 5% discount. That may not sound like much, but on a $749 television that saved us $37.40. That was MY $37.40. Not only did we save, but when we got home and set up the new items, it felt different. We owned it. There wouldn’t be a bill coming in a month. We would not be rushing to pay it off before the interest free introductory period ended. We did it. We worked hard and saved and the reward was ours to enjoy.
I believe that it was partly more enjoyable as it was the very first item we bought after we had paid off our debt. We actually had a small 25″ tube television that we used for over 2 years when are larger one was damaged during a lightning storm.
Sure, we could have rushed out and bought something right, but that would have come from our emergency fund. A television is a want – not a need. For us, it was not a true emergency. We had a TV that would work. There was no need to nearly empty our savings account just for a television. It was about priorities and a TV is not one (as far as were both concerned).
No interest charges
If you use a credit card, it is very simple for the average person to make just that minimum payment rather than pay it in full. For example, a $5,000 credit card debt at 22% interest, could cost you close to $13,000!! It would take just shy of 11 years to pay it if in full, if you make the minimum payment of $100 a month. Your interest would be more than $7600 alone!!
I do know that many of you are disciplined enough to pay down your cards every month — which is great! However, if you know that you are tempted to fall into the minimum payment trap, using cash is definitely a wiser way to go as you will never find yourself paying more than the original purchase price.
I’ll just say it. Spending cash hurts. There is something about handing over a stack of twenty dollar bills to pay for your groceries vs. swiping a card. It is the physical act of actually handing someone the money you worked hard to earn.
Think back to when you were younger. You probably saved your money once for that big purchase. While you worked hard, it was sad to see all of that money leave your wallet.
The same is true as an adult. When you use cash, you are often more aware of your spending as there is no way you can overspend. The worst thing is when you add to much to0 the cart and have to put something back at checkout as you do not have enough money.
It just makes you think twice before you buy something. That is a trick I think most of us could use in our money saving arsenal.