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  • Contemplating All-Cash Spending Experiment v.2

    A lot of people claim that you spend less when you only use cash, including bloggers I admire like Crystal of Money Saving Mom. Four years ago, my husband and I attempted the shortest-lived all-cash experiment ever, and I gave up on an all-cash system for us. After all, we do just fine without it – we are still very conscientious about our spending, save money every month, and maximize our credit card rewards.

    But yesterday, Josie at Southern Cali Saver wrote about how the envelope system works for her. With the envelope system, each envelope holds the cash for a category in your budget.

    It got me thinking about trying a modified “some-cash” spending experiment – maybe just for the categories where I could use a little more discipline, like the groceries and stockpiling. I tend to just grab the good deals when I see them, without worrying about whether I’m overspending for the month (on the theory that it all evens out). But maybe if I were more conscious of exactly how much I’m spending, I could save enough money to make the effort worthwhile.

    I’m going to have to put some thought into this – I don’t really know which categories I would switch to cash, and it’s been so long since I’ve had a formal budget that I’m not sure how much to budget pet category. But it’s definitely something I’m going to think about and revisit in the next few weeks.


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    Comments

    1. We are going through this right now, too. I know that you’re supposed to spend less when you see and feel cash, but it seems so inconvenient to me. Plus I earn 5% back on my Amex for groceries, drugstores and gas, so I just stick to those budgets on paper (and I really stick to them) so I feel fine with it. Last month we decided to move entertainment/eating out/kid money to the cash envelope, and it’s been helpful. We talk about it as a family–if we spend $50 eating out at the beginning of the month, what’s left for later? It’s helped to get the kids on board with our savings goals.

      • Chief Family Officer says:

        I love the way you’ve got the kids involved. Like you, I get 5% back on the Amex so maybe I too should just really STICK to a budget, just on paper. Thanks for the food for thought!

    2. I do groceries, and just groceries (and toiletries) on a cash only basis. Sometimes I take it all out at the beginning of the month, and sometimes in one or two installments. I am a horrible budgeter, I never remember what I spend money on, and when I do remember my memory has this tendency to round it down for me. :-) I NEED the visual of how much money I have for the month.

      However, my husband is great at that sort of thing, so everything other than groceries/toiletries goes on the card, and then past the eagle eye of husband when he balances the books. He is a very easy going guy, but it does make me stop to think–can I explain out of which category we are going to pay for this?

      • Chief Family Officer says:

        I love that you have found a system that works for you. I am thinking that if I do this, I may only have one category for groceries and drugstores. Still thinking things through, though. Thanks for sharing!

    3. We did the cash only thing for a while, but it didn’t really work. I buy a large amount of our groceries on-line and through co-ops (to get better prices on organics). I’d say 80% of our shopping I do that way. We get our gas at Sam’s Club, which only takes a card as payment. We do a trip to Costco twice a month and the lines for self-checkout, which only take cards as payment, are much shorter so we usually use those. The only time I spend cash is about 1-2 times a month when I go to the actual grocery store between Costco trips. Everything we use cash for, but that stuff, we just use our debit card. It can definitely be tough to go cash only when you shop unconventionally.

      • Chief Family Officer says:

        The self-checkout thing is a good point – I use it whenever I can, and while I think you can use cash at the ones at my stores, I hate feeding money into machines. And I couldn’t do gas either, since we always go to Costco and they only take Amex (so much cheaper!). Thanks for the additional points to consider!

    4. this is how we work it. I use a cash system for most stuff–groceries & gas. I’m about to turn my husband over to using it for “drugstore” expenses, to make sure we’re staying in budget. My goal is to go one category at a time until it becomes a habit. Going whole hog isn’t our style, and so far so good.

    5. We almost never spend cash, and I prefer it that way! But we pay our credit card bills in full every month and we only use cards with no annual fee but with a reward system.

      We do a very detailed budget plan with Excel each year, and then I track every single purchase we make. For me, I’ve learned that if I keep up with my bookkeeping, at least monthly but preferably daily or weekly, it keeps me in line on the various spending categories we use. It’s a very basic spreadsheet — each month, I make “deposits” into each category in the spreadsheet, and then I subtract out each purchase we make. At the end of each month, I do a total sum of each category and see what’s left over for carrying over for the next month. Plus, the dual confirmation of spending (initial credit card receipt and then monthly credit card bills) helps me know that I’m not letting anything slip through the cracks spending-wise.

      I have found it’s a LOT harder to do with cash, especially when you have a partner like mine who forgets to mention things. We had to make an adjustment last fall to our system because my husband and daughter both joined an art (roller) skating club and they get private coaching sessions. My husband started out paying cash, which was a huge mess because he wouldn’t remember to tell me the totals and it isn’t something you get a receipt for. I finally dug out my dusty checkbook (I use online billpay to pay bills) and gave it to him to keep in his skate bag. At least now I have a way of tracking what they’re spending!

      Anyway, I do think it’s crucial to keep track of spending, whether it’s putting money into envelopes so you can see how much you have left in a category to doing the detailed bookkeeping that we do.

      I hope you’ll let us all know how it works for you if you try a new system!

      • Chief Family Officer says:

        I hear what you’re saying – it was definitely true for us back when I started really learning about personal finance. But I don’t think I have it in me to track every purchase, etc., anymore. I love that you gave your husband the dusty checkbook – that’s pretty much how our checkbook is too! I’ll keep you updated – still trying to think things through :)

    6. We are doing a similar experiment in our house, however because we are not willing to give up the rewards we earn from our credit cards, we are “tweaking” the cash-only experiment. We have envelopes, but instead of putting real money in them, we have put Monopoly money in the envelopes. Then, when we spend money using our credit cards, we just come home and remove the Monopoly money from the envelope. We have been very good about doing this so far. We remove the Monopoly money as soon as we spend anything on a credit card (and if we happen to spend cash, we remove money from the envelopes as well, of course). We are only on month two of it, but it has been pretty interesting to tangibly be able to see the amount of money we have left and where our budget needs to be adjusted.

    7. The cash experiment just did not work for me. I like to see numbers visually. First month, I spent time counting money so often and then 2nd month, I started writing down the expenses. By 3rd month, it was just too much for me. I switched back to checking account. Just transfer the budgeted amount from savings to checking. Also, I can check the balance on phone whenever I want :)

      However, the process pleases so many people and everyone should give it a try to see how it fits them. All the best for your new version of the experiment.

    8. I love mine but since it was a wedding gift in the mid 90′s I cannot imagine it is still available! I go thru phases of using it a lot and then not but it has been a life saver in the summer when I really want fresh bread and don’t want to turn on the oven! My SIL has and LOVES her Zojirushi BBCCX20 Home Bakery Supreme Bread Machine which is what Crystal at Money Saving Mom also has. It is a bit more pricey but if you use it often worth the price. I like the shape a lot better than mine but while mine still works I will use it until it dies.

      • Chief Family Officer says:

        Yes, I can see that during the summer – I tend to bake exclusively in my toaster oven! I’ll take a look at the Zojirushi – thanks, Tia!

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