If you find yourself going to the grocery store just to buy a few items or a department store and walking out with more than you anticipated, you may be overspending. It’s a common crime which far too many people commit. Most of the time, this happens when someone pays with a credit card or debit, and although these forms of payment can be helpful, they tend to make people forget how much they’re really spending. The best solution to this scenario is to get in the habit of paying with cash.
Using cash over credit helps you keep on-par with your budget. Not only does it limit the amount of cash you have on your person, but it turn restricts the amount you’re able to spend. This boundary doesn’t exist when you pay solely with plastic, and because of this, you’re able to stay on budget, even if it’s a tight one.
Learn about Managing Money
When you’re only carrying cash around, it forces you to learn how to manage your money and control your expenses. This is because the cash you carry is all you have, and if you spend it frivolously, you’ll be left with nothing. People tend to have trouble controlling their finances when cash isn’t their only resource. In fact, many people can quickly fall into debt.
Reducing Debt and Stress
When all you use is cash, you don’t have to worry about repaying an individual or institution like a bank. That means, at the end of the month, you don’t get a bill or a credit balance you need to pay. The reasoning is obvious, your bar tab was already paid in full, in cash. With little or no debt, you also have less stress about your personal finances and your financial future.
Promotes Personal Growth
When you’re only paying with cash, you learn to understand your necessities more. You may find yourself asking, “Do I really want this? Do I need this?” And you may find yourself saying, “No, I really don’t.” You start to learn the value of a pound and in turn, start to give yourself more boundaries. You feel more responsible, you are confident about your financial situation because you are in control. This leads to self-improvement and personal growth.
Easy Tracking of Spending
When paying with cash, you have a better sense of how much money you have and how much you spend. However, during long nights, it can be a little difficult to keep track of all of your money, even with receipts and spare change. That’s why some people use the envelope system, a practice of dividing their spare cash into categories for different uses, such as groceries, entertainment, savings, etc.
Keeping Out of Debt
This has already been glossed over, but using cash only can help keep you out of debt. However, no payment plan is perfect, and even if you use solely cash to limit your spending, you’re liable to slip up every now and then. There are a number of reasons you may find yourself spending more than you planned including auto emergencies or urgent health scenarios. Then what? You get yourself into debt problems you weren’t planning on. Fortunately, there are credit counselling organisations like Consolidated Credit to help get you out of debt and back on track.
As you can clearly see, the cash only method works wonders for people who are trying to stay on a budget. With a little practice and discipline, you can too.
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