Staying on Budget: Ditch the Debit Cards and Stick to Cash

Dollars & Sense on 08.16.11
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We live in an age of convenience. Could you imagine having to live like our parents did as kids and even adults and actually have to go to the bank every time you wanted to buy something? Sure, they could write a check, but only in places that would take one.  ATM machines first entered the world market in 1972 allowing people to get cash whenever they needed it, and that was followed by the introduction of the debit card in 1982 which of course now allows us to access our money wherever Visa and/or Mastercard are accepted. But with each increase in convenience comes the temptation to buy items-sometimes ones that we can't really afford- because the money is so easy to access. What would happen if we ditched our debit cards and only used cash?

Stick to Your Budget

Ok, so I haven't exactly done hours of research on this topic, but the principal is quite simple. If you leave your debit cards and credit cards (equally as dangerous if not more) at home and only bring the amount of cash with you that you have budgeted, then that's all you'll be able to spend. So if your family budget allows you $100 at the grocery store this week, then only bring $100 with you. You'll be more likely to pay attention to those unnecessary items that land in your cart, but don't seem like a big deal because they're only a few bucks. And when you end up at the checkout with $110 worth of items, you'll be forced to put some things back, making you prioritize and forcing you to stick within your budget. If you had your debit card with you, chances are you'd think "It's just a few bucks." And you'll find yourself short at the end of the month.

How about when your child is hounding you for that ice cream cone or toy or piece of candy or trip on the carousel? It's much easier to say no if you don't have the money on you. I'm not saying that you shouldn't have some fun, but the fun needs to come from the fun budget and not just on a whim. If you budget $50 for entertainment then those treats come from that money and if you don't have the money with you, then you plan for it another time.

Personally, I find that it's easy to stop for that cup of coffee even when I don't have the cash because I can use my debit card. Or sure I'll get the kids a treat even though I shouldn't because it's possible with the use of my debit card. But inevitably I am wondering how I spent so much in such a short period of time and when I shouldn't have done so. I'm not sticking to my budget because it's so easy to access the money when I'm in a pinch-for something that I don't really need but want. If I left my debit card at home, I'd be padding my bank account a bit and wouldn't actually be missing much.

Be Prepared

Some people literally get their paychecks, cash them, and divvy up the cash into envelopes with the allotted amounts for their budgeted items. This is certainly one easy way to do it, but I also understand if people prefer to keep the bulk of their cash in the bank. For these people, I recommend just taking out the amount of cash needed for things like groceries, gas and entertainment, and leaving the remainder that is budgeted for utility bills, rent, and other more fixed monthly bills in the bank until needed. Write a check or pay those bills online.

Of course, it's still a good idea to have a debit card and a credit card. Emergencies do happen, and if your car breaks down and you need to get it fixed as soon as possible, sometimes a credit card is the only way to do that. But when it comes to everyday spending, leaving the cards at home and moving to a cash only system is likely to ensure you stick to the family budget and don't splurge when you should be spending.

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