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When was the last time you held a crisp $100 bill in your hand? The other day I ran to one of my favorite consignment stores just needing a fresh look for spring. I found two items of clothing that I kind of liked. You know what I’m talking about? They were okay. They would do in a pinch. After all, I was out, I tried on 54 articles of clothing, and I wasn’t about to walk out empty handed. I headed to the cash register to make my purchase and do you know what was in my clothing budget?? A brand new, crisp $100 bill. I looked at the clothes. I looked at the crisp, brand new $100 bill. I looked back at the clothes. I looked at the $100 bill. And then I did it. I walked over and returned the clothes, that I didn’t really like, back to the rack. I just couldn’t break the $100. In the end the clothes weren’t really worth it to me. Had I had a debit card, or worse…a credit card, in my hand I never would have thought twice about it. I left that store empty handed, but still smiling at myself. All of this happened because of a cash budget.
I must first tell you that this is not my original idea. Our budget is based on the teachings of Dave Ramsey. We started reading his book and listening to him when we first got married. His principles, along with a few other wise voices, have shaped our financial views.
If you are not using cash for your budget, I’d like to give you FIVE simple reasons why you should start TODAY:
1. It hurts to spend cash.
Just like I mentioned above, spending cash will be felt. You will hold the bill in your hand and decide if the item is REALLY worth it. I’ve been at the grocery store before and taken items off the belt because I just didn’t want to spend the money. No one went hungry. The things that were taken off were just impulse buys…things that weren’t on my list. I know I’m not alone in buying things that aren’t on my list, right?!?
2. When you spend cash you can keep tabs on your money easier.
If someone asks your family to go grab a bite of lunch after church and you have a $5 bill in the “eating out” section, you will quickly know that your family can not participate. There’s no back and forth between you and your husband about how much is in that line item or, worse, how much is in your account. You immediately know, with one glance. So Simple.
3. When it’s gone, it’s gone.
If there’s an opportunity for a date night and you’ve already spent it, you will not go out to dinner. This is okay. You will not die. Instead you can choose to do something free like going on a walk together, playing tennis, or cleaning out a closet. There are all sorts of free things to do to spend time together. If the money in a certain category is gone, it’s gone.
4. It helps prevent arguments.
The presence of cash, or lack there of, does not lie. If there is no entertainment money, you don’t go to the movie. If there is no allowance, you don’t get that special treat. But what about telling our children no?!? It’s okay to tell children no. In fact, it’s good for them to hear the word no. It’s also good to explain to them that mom and dad live on a budget and we, as a family, are trying to be the best stewards of the resources God has placed in our care. These are good, healthy conversations to have.
5. It keeps everyone on the same page.
At the beginning of every month, we sit down and talk about the month. We look over things that we know will come up. We look over categories that have savings in them. We discuss our finances. We look at short term goals. We look at long term goals. We marvel at God’s provision for bringing us through another month. It’s good to sit down and talk about money. It’s good for everything to be out in the open. It’s just healthier that way.
Of course, cash doesn’t work for all our monthly expenses. For example, I don’t carry around cash for our mortgage or our car insurance. Here’s how we pay for various categories in our budget:
We use cash envelopes to pay for groceries, eating out, haircuts, cosmetics, entertainment, laundry services, clothing, and monthly allowances for the kids (and misc. spending money for the grownups). I have a separate envelope for each one of these categories.
I use this envelope for our cash. By clicking on this link, you too can have your very own envelope for your budget.
Each month, we “deposit” a specified amount of money into “accounts” that we track on paper (Really, we track these accounts on a spreadsheet. Well, Fred does most of the tracking. He’s admittedly nerdy that way.). Some of these accounts represent expenses that we pay only once a year, and some of them represent inconsistent expenses that crop up throughout the year. Here are our short-term savings “accounts”:
Taxes (If your ministry/job/lottery winning doesn’t withhold taxes, you need to anticipate and save for these taxes yourself. Taxes, like death, are realities. Prepare for both.). Also, we save monthly for annual gym fees, summer camps/activities, school supplies (I can not begin to tell you how much we spend on these in August!), household repairs, car repairs, car savings (We try to pay cash for cars.), sports fees, vacation, Christmas (It comes the same time every year!), birthday gifts, car tags, and property taxes.
We have the following expenses scheduled monthly for automatic draft with our bank (Technology is beautiful, isn’t it?):
Utilities, house payment, internet, term life insurance (for both of us), car insurance, homeowners insurance and cell phone.
Some things, you still have to do the old fashioned way:
Tithes (to our church) and school lunches
We use our debit card to purchase gasoline and gifts (which comes out of the savings line item mentioned above).
Our checkbook is pretty simple. At any given moment I can tell you where we stand financially. We are both happy and at peace with our financial decisions. And those clothes I returned to the rack?!? I have no regrets.
What about you? Are you on a budget? Do you use cash? I’d love to hear your story or offer you encouragement. Just shoot me a message, comment on this post, or better yet, share it and start a discussion about budgeting. It’s the new cool, people!