Carrying Your Budget In Cash

I’m trying a new thing with our food/entertainment budget, and it seems to be working. At the beginning of each week, we withdraw our budget in cash. Then we only spend out of that pile when buying food or entertainment. When the money is gone, we don’t get to spend anymore until next week.
So far, this method is keeping us from going over budget. Even better, since any extra money gets rolled over into the next week, it is encouraging us to save and spend less money. Likewise, when we are done, we have to stop because there’s nothing left.
A few point about carrying our budget in cash:
1. It is keeping us honest. We were surprised to find that we were almost out of money by Thursday. My husband and I thought we were keeping close to our budget, but it turns out that we had been regularly overspending without realizing it. This method showed us that in no uncertain terms, and it was a good thing to learn.
2. We learned what our budget feels like. Now we know how it “feels” to spend the amount of our budget. In the future, I will know approximately how much food/entertainment I can have in a week for that amount of money.
3. I am spending less. When I have $20 left in my wallet and that’s all I get, I am more likely to shop for bargains and weigh every penny before spending it. It is keeping me frugal.
4. It is making me more creative. Instead of spending money, I am more likely to use what I have or to do without. Instead of going out for a bottle of wine when I had a friend over, I improvised cocktails. Instead of going out for breakfast, I made a satisfying one with oatmeal and mulberries. My incentive here is to save as much money as possible so I can have more fun with what’s left.
5. No surprises at the bank. Although we never overdraw our bank account, this way it’s not even a possibility. The money comes out at the beginning of the week and that’s that. No surprise dinners that I forgot about and have to transfer extra money from savings to cover. (A rarity, but it has happened!)
This method only works if you are disciplined about spending cash. But if you are, I suggest trying your budget in cash, if only for a few weeks. It simplifies the matter and forces you to keep to it.

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7 thoughts on “Carrying Your Budget In Cash”

  1. I like your idea of doing this for food/entertainment. I’ve read of others who do it for everything, but never could figure out how that would work for me since I pay all bills online. I am curious, though, how did you decide what amount to start with in the fund? Did you track spending for a couple weeks first?

  2. Anna, you don’t need to track cash for your bills. The best use of cash is in your variable spending, not your fixed expenses-bills are considered fixed expenses, even though they can fluctuate, like heating does.
    Anything like clothes, food, entertainment, those are the best expenses to use cash for, because it’s possible to change-and sometimes dramatically-how much is spent, just by having cash in hand. When that cash is gone, no more spending.
    Making that first food budget can be daunting, but make meal plans, figure out what you might need to make those meals, then, after bills are paid(don’t forget a little into savings for emergencies or bigger expenses), see what’s left for food. Work your meal plans into what’s left for food as cheaply as possible, and use cash to shop.
    It takes a bit of time to figure out, and get used to, but, it is worth it. A wonderful resource for living on cash, and getting out of debt, is

  3. Anna, I agree–It seems inconvenient and confusing to pay all of your budget in cash, although I guess it works for some people. Wolf Song has some great advice. Here’s my approach to setting a food/entertainment budget: First, we defined what is in the food/entertainment budget (food, eating out, any activity that requires tickets like movies or museums, getting coffees/drinks, etc). We also looked at what it didn’t include (buying household items like toilet paper, sporting equipment, etc.). Then, yes, we tracked what we spent each month by writing everything down and adding it up at the end of the month.
    Once we had all the information, we set a goal for how much we wanted to spend a month on food/entertainment and broke that amount into a weekly budget. So say we wanted to spend $400 a month on food and entertainment, we would then have a weekly budget of $100. Over time, we have adjusted it so that we can lead a comfortable, fun life (feeling deprived sucks) but aren’t excessive or frivolous. It’s all about balance.
    Hey I’m inspired–maybe I will write a more detailed post about this subject later in the week.

  4. My husband and I tried this after watching Gail Vaz-Oxlade on “Til Debt Do Us Part” on Slice in Canada.
    We take our variable expenses – spending, food and miscellaneous – and withdraw every two weeks after payday.
    I found a budget online somewhere that recommended spending 8% of your monthly budget on entertainment, and that helped guide me on what to take out. We each get an allowance of cash each week, and that makes us responsile for the spending.
    Our food was easy to budget – I’ve been able to track that with cash and debit purchases, so had an idea of how much to take out for two weeks at a time.
    The miscellaneous costs was a bit of an estimation, and we’ve been able to tweak it to an amount that is comfortable for us. This category covers cat litter, personal care, cat food, gas, etc.
    We also track our spending in a budget binder and I use an iPhone app called Cash Tracker.
    We love this method – it’s allowed us to clamp down on spending, see where our money is going, feel the “pain of purchasing,” and be accountable and responsible for our money. Love it!

  5. Linzerella, great to hear it works for you too. Never thought of using a cell phone app to track the budget, but it makes a lot of sense.

  6. Came across your site this evening and find it delightful. Just have to make a comment here. Sorry to sound like Great Grandma (which I am) but, here it goes… This is how we handled our money in the olden days (circa 1963). We didn’t have a checking account until later. Thank you for triggering some nostalgia, and glad to see you are doing this.


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