Hey there! I hope your budgeting is coming along – I’m proud of you for sticking with it this far. I know how hard it is to start budgeting.
If you’ve been doing the homework, you’re right in the thick of things. You’re probably working off a budget you’ve created and learning that it’s fluid and needs to be tended and adjusted on a regular basis. Maybe you realized you forgot an important category, or maybe you overspent because you didn’t plan for an expense.
This is totally normal and to be expected.
I promise you – budgeting will feel easier as you go. It’s like any skill…it requires practice, and the more you do it, the more natural it becomes.
But today I want to talk about one simple thing you can do to really rein in impulse spending and make smarter financial decisions for just about every expense.
I want to talk about the power of cash.
Hopefully, your budget is using cash for every category possible. I KNOW this can feel awkward and cumbersome at first (not gonna lie – it’s a pain to have to take cash out of the bank twice a month). It can even feel weird to pay with cash if you’re not used to it! But it is so, so worth it.
Let me share a quick story.
I was recently given a couple hundred dollars. I knew the money was coming, and that it would be mine to spend however I wanted. Before I even received it, I had it spent in my head. I had a couple of purchases I was going to make, and I couldn’t wait until that money hit the bank so I could buy, buy, buy.
But then something funny happened. Instead of making the purchases online as soon as the money hit the bank, we pulled the amount out in cash and put in my envelope (yep, I have an envelope for my monthly “allowance” – as does my husband!). All of a sudden, I didn’t want to buy those things I’d been dreaming about for the last two weeks.
Instead, I wanted to hold on to my money! I realized those purchases were really impulse buys (even though I’d been thinking about them for weeks!).
That money is for me to spend, and I will…but having it in my hot little hands created a completely different relationship with that money than I would have had if I’d just made those purchases online.
Instead of buying something I thought I wanted, I decided to tuck my money away. For the time being, I want to save it… watch my stack grow. I WILL treat myself, at some point…but it will be something I value, and my purchases will be mindful. And maybe I will end up deciding to make my original purchases! If that’s the case, I’ll feel good about it, because I will have spent some time really thinking about it.
Here’s your homework:
Take cash out for every single expense you can pay for with cash. Make this a habit. If you end up making the purchase online, just move the cash to another envelope and adjust your budget accordingly when you make your next cash withdrawal from the bank.
See how this little exercise can literally change the way you spend your money – and potentially save you tons of money.
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