I have burned through a lot of cash this month. I am typically a credit only spender – I try to keep my cash purchases to a minimum because I end up losing track of where the money went. Cash seems to grow wings and fly out of my wallet. Usually this isn’t a problem. I withdraw around $60 a month and even though I’m not tracking where it goes, I know that I spend cash at the farmer’s market and when going out for drinks with friends. I don’t worry too much about which amount goes where.
This month, things have gone haywire. Part of the problem was that while I was out to dinner with friends, the restaurant’s credit card machine went down, so we all ended up paying in cash rather than wait for the credit cards to be called in – which eliminated a chunk of the money that I had planned to spend at the market. This meant a trip to the ATM. Then, after going out to dinner, I ended up paying for someone else’s dinner on my card and getting cash from her, so there’s once again a chunk of cash in my wallet.
I’m doing my best to not spend it so that I can start October with cash in my wallet and not have to withdraw quite as much from the ATM, but it’s hard. It’s so much easier to say “Sure, I’ll go for coffee” when I’ve got a $10 in my wallet than if I knew that I would have to pull out my credit card, save my receipt, and log it in my budget.
Clearly, one solution to this would be to start tracking my cash expenditures, but every time I’ve tried that, I’ve ended up overwhelmed with receipt-less transactions (like when I go to the Farmer’s Market).
I continue to be impressed by people who have gone to a cash only system. Even though I’m good at saving receipts, I like putting all my purchases on one card so that I have an easy record of what I’ve spent and where I’ve spent it. Plus I really like rewards. Additionally, it’s good incentive to control my spending when I have to watch that credit card balance climb, knowing that I plan to pay it off at the end of the month. The lower the balance stays, the higher my bank account balance will be once the bill is paid.
I think maybe I’m weird in this – so many people find that “cash only” is the best way for them to control their spending. But I guess this just shows that the solution to keeping spending down isn’t one size fits all. What are your tips and tricks to controlling your spending?
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
Hey Megan – funny you should mention this. I am like you – I prefer using plastic over cash so that I have a record of the transactions. I use a check card right now, though. But I am considering getting a cash back rewards credit card to use in the same way. I just recently paid off my credit cards so I’m wary of using one on a regular basis. But the rewards are tempting and I have 4 solid years of living within/below my means telling me I can do this. It sounds like that’s what you do. Do you just charge everything to the one card and pay it off completely every month? That would be my plan.
I’m completely the same way. I’m much more likely to splurge if I have cash in my wallet. The act of having to bring out the credit card makes me think a little bit more. Plus I like rewards and being able to track my spending!
I’m the exact opposite of you. When I have cash in my wallet it seems so much harder and more painful to spend cold hard cash than it is to write a check or use my debit card. I once had the same $5 bill in my wallet for almost 5 months!!
Amelia, that’s exactly what I do – I charge everything to one card for the rewards and then pay it off completely every month. I track my spending so in my brain, once the charge is made, the money is gone, no matter what my bank account says.
I keep ALL of my receipts. Including the ones from the ATM, so whenever I have cash and then use it, I know at some point where it came from.
It works for me! I would use my credit card more often if it gave me some sort of reward, but my credit card is so new that I use it maybe once or twice a month. So pretty much all my spending is done from my checking account!
We definitely use the Amex for as many purchases each month as possible. It works better for us, and there are so many rewards for spending on the Amex. And as there’s no option to carry forward a balance, there isn’t that temptation to let it ride for a month and then pay interest on it.
I have the same problem. I’ve been doing better lately with spending cash that I end up with on things like groceries, instead of extras. DH’s cash still has wings, though. Can never figure out what he spends it on. All I know is how much he got.
It’s obvious that credit cards work best for you when trying to track your budget. So instead of saying that, you need to find a way to track your cash purchases the way you do your credit card ones. Obviously, collecting receipts won’t always work. You talked about a notebook you carry with you a couple weeks ago. Why not write down your purchase amounts while you’re at the Farmer’s Market? You could track all your cash purchases in your notebook. Or do what I do when I’m out, using cash and not always getting receipts – save the amounts to your phone’s notepad. It’d just take you a few moments, and you already carry your phone with you so you don’t have the added hassle of making sure you always have your notebook. Good luck!