If you have tried to stick within a budget before and have not been able to stay within your limits, then you might consider a cash-only diet. Today, many people pay for everything with debit or credit cards. This makes it easy to overspend without even realizing it. A cash-only diet is an easy way to make your limits very real and obvious. Everything you would have bought with plastic, you instead pay for with real dollars.
In order to start a cash-only diet, first you must have an established budget. You must already understand your spending habits and have goals in mind. Then, begin with a time-frame that makes sense for you. You can choose a one month period, two weeks, one week, or whatever you’d like. Within this time period, sort out the expenses that you can control. Generally, these are expenses that you don’t receive a bill for, such as clothing, groceries, or entertainment money. These are the areas that you will be working on while on your cash-only diet.
Since you have already come up with a budget, you can then use those numbers to determine how much cash you need for each category. Withdraw that amount from your bank account and set aside your credit or debit cards. If you still have these in your wallet you will likely be tempted to use them if you are running short.
Next, find a convenient way to separate your cash into categories. One option is to put the money for each category into a separate envelope. Title each envelope with the category, such as “household expenses.” When you go to the store, you must make sure to have the appropriate envelope with you. This helps to reduce impulse spending.
Still, unexpected expenses do come up. When you are on a cash-only diet, it is okay to allot for some of these. Since you already have your cash set aside, you can decide where the money you need will come from–as long as it’s not from your credit card or bank account! For instance, you might choose to take twenty dollars from your clothing budget to pay for an extra trip to the movies with friends. The main point is to not spend any extra money, even if you have to shuffle a little money around between categories.
The great thing about this diet is that you are always aware of where your money is going. A cash-only diet is a great way to really force yourself into being smart with your money.