Where the fuck does your paycheck go? Between bills, brunch, and your occasional binge shopping trip, you can’t seem to keep your head above water from one payday to the next. If you find yourself flush on Friday, only to be penniless by Monday, you may need to cut your spending.
Here’s my trick for staying on track financially, while enjoying my income.
To dial back your spending, use cash for any and all discretionary purchases. Simple as that. Although this method takes some planning, it will save you big bucks in the long run.
1. Track your expenses
To get started, track all your essential expenses for 1-2 months to estimate how much you need to set aside each pay period to meet your needs. Essential expenses include housing, groceries, utilities, transportation, student loans, and the like – if you need to pay it to keep yourself fed, clothed, employed, and sheltered, it’s an essential expense.
2. Determine your allowance
From there, you should be able to estimate how much money is left over to spend on your lifestyle, keeping in mind you should also be saving 10-20 percent of your pay for emergencies. This money is your allowance.
3. Withdraw your cash
Come payday, you first pay for those aforementioned essentials. Then, withdraw your discretionary allowance for the week in cash. If it’s more than $150, keep half on your person and the other half in a safe place, just in case you lose your wallet (as I tend to). Then, as you go about your week, use the cash and only the cash. When it’s gone, it’s gone – no dipping into your credit cards.
Not only does using cash make the money you’re spending seem more substantial, but it reminds you to parse your spending out over the course of the week and limits impulse buying. You’ll be less likely to buy a round of drinks at happy hour on Monday if you notice your allowance dwindling and know you can’t replenish it until Friday.
The only way this practice will work is if you stick hard to your allowance. I know it’s not practical to make every purchase in cash, however. For example, say you’re lusting after a new pair of boots or a gorgeous light fixture for your dining room, expenses that exceed your weekly allowance. The answer is to save for them. At the end of the week, any leftover allowance cash goes into a pile for big purchases, and when you reach the total of the desired item, you can obtain it guilt free.
It may sound too simple to be effective, but using cash is the perfect method for keeping your spending in check. Do you have any hacks to avoid blowing your dough each week? Tell me in the comments or tweet me!