We wanted to do something valuable with the motivation of January, and we knew that there was a lot we could consider but have already tried to budget well. So this month, we went pretty extreme: other than mortgage and fixed bills, we’re only using cash this month.
Why? That’s a good question. It turns out, people are more willing to spend money when they only are using plastic than when they spend cash. It feels more finite to have an actual pile of twenty dollar bills for the month than to have a certain amount in a bank account and just swipe a card all month. It’s a psychological thing,
So we figured out how much we were willing to spend in a month for each budget category, a bit for groceries, a bit for gas, etc. We put that much cash into an envelope and labeled it. We figured that this way, we have a physical budget: if we do something that costs more than what is in one envelope, we’ll have to get it from another envelope, and thus reduce spending in that category.
Granted, it is pretty artificial since we still have cards we could use, but the hope is that we’ll spend less than usual and think more about what we are spending money on. Already, we’ve put off a few non-essential purchases because we didn’t want to run low on cash, so I think some of the needs will go away as well.
If something comes up that we need to address without cash, we’ll do it, but the goal is to become more aware of our spending so that we keep from letting our spending slowly creep higher and higher. Maybe it isn’t necessary, but we’re trying it to see if there is anything to learn!