2/10/12

Cash Diet... Blessing or Burden?

I'm often inspired by my friends and like to try new things after I know someone who has done it and has had success from it. Afterall, that's how I got into couponing! A good friend of mine decided to live on a cash budget and loved the way it helped her and her husband to be more aware of where their money was going each month.

So, after seeing that it worked for her, for the past two weeks, my husband and I (rather, I forced my husband into it) have been living on a cash diet as well. For those of you who may have never heard of a cash diet, this is where you physically go to the bank and withdraw cash to live on rather than using a debit or credit card. So, each payday, I go to the bank and withdraw the money we need to live on until the following payday.

I had always been scared to try this method of budgeting because I thought it was too restrictive, and we have a tight budget already. I like to have a little wiggle room in my grocery, health, dining out, clothing, etc. budget. To go on a cash diet is to give each of these categories a specific amount for a specific time period. It's a little crazy to those who have never tried it. And it does take commitment to stay within your means and resist using that credit card.

To give you some explanation of what a cash diet is all about, here's what you do. Mark envelopes with different categories of your weekly spending and place the budgeted cash amount in each envelope. That's all you get for the week, so you'll want to think about what you normally spend and budget accurately. Say you have $500/week for everyday expenses. You may have more or less, but this is just an example. Here's how you may budget it:

Groceries = $150
Gas = $100 (2 vehicles)
Clothing = $40
Dining Out / Entertainment = $60
Healthcare / Dr Appts = $50
Gifts = $50
Vacation Fund = $50

You get the general idea, I hope. You may completely disagree with the amounts I have listed or have different weekly expenses altogether. With a cash budget, you choose the amounts and categories. Work off of what you normally spend the first time, then if you want to cut certain areas back or add to others, you can. Remember, this does not include your regular set bills such as mortgage/rent, utilities, etc. But also notice the vacation fund. It's important to budget for the fun things in life as well and it will help you to stay on track in the mundane expenses. Plus, if you have any extra money left over for the week, you can place it in your vacation fund or something you're saving up for.

Another plus to this method of budgeting for me is that I do not have to keep track of every receipt. I use the money in my envelopes for what I'm buying and only use my debit card for gas. I make sure there is enough money in checking for the weekly gas budget. Let's face it, it's much easier to pay for gas at the pump than go in and pay cash. Let that be your only debit card transaction for the week though.

I challenge anyone who has been hesitant on trying the cash diet to go for it. Yes, it is a bit of a burden to commit to staying within your means, but I know you will be blessed in knowing that you are being a good steward of what God has given you.

1 Comment:

Mama C said...

We've done the same thing. The only downfall is that I have a habit of "borrowing" money from my grocery fund. Now my hubby gets me $150 gift cards to Publix. My friend Bethany shared this idea with me and it has worked great for us.

 

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