Frugal living has not always been a popular choice, as people want to be able to afford luxuries to make their lives more manageable. However, more and more people are seeing the benefits of drawing up a budget and getting their spending under control so that they have enough money to pay their bills with enough left over to take care of themselves and their families. If drawing up a detailed monthly budget that includes incoming and outgoing expenditure sounds like a lot of hard work, you can make life easier by changing your spending habits by paying with cash.
Remember what life was like as a child when your parents gave you a weekly allowance? They gave you a specific amount of money and made it clear that this was your whole allowance for the week with the warning not to spend it all at once. For many children, this is just the right incentive that is required to budget their money accordingly. With some careful planning, you too can budget by giving yourself a weekly allowance.
For this to work, you must have a clear idea of your total monthly income. Once you have a figure in your mind about your total monthly income, you can then divide your monthly income into four, to come up with four weeks. Apart from bills that are paid online through automatic bill pay such as water, gas and electricity, what other incidentals do you usually pay for using your credit or debit card? Do you use your credit or debit card to buy lunches for work each day or when buying fuel for your car? If so, these expenses can be covered by using cash. There are many advantages of paying with cash, especially at a service station, as you can use any pump in town without paying an additional ATM fee.
For some people, paying with cash makes them feel vulnerable, as they are afraid that they will not have enough money to cover their expenses. Credit and debit cards provide people with the security to carry on spending even when it would be best to stop. Others are worried about carrying large sums of money on them in case the money is lost or stolen. These are valid concerns. But if you set yourself a weekly budget of say $200 to cover a week's worth of fuel, groceries, and lunches, work out how much you should carry on a day-to-day basis and leave the rest at home in an envelope. Carrying cash forces you to limit your spending so that you have to calculate your expenses as you go along in the supermarket and elsewhere.
If you find that you have spent all your weekly allowance within four days, you will then have to stop spending for the rest of the week until your next allowance period begins for the budget plan to work. This will give you the opportunity to work out where the money has gone and how best to curb your spending habits in a particular area.