Hey there readers, as I’m writing, I’ve just finished my first week back at school where I teach junior high band.
It’s always really nice to be on break with Katie, my wife, and our two small ones, but it’s exciting to get back to work and see my school kids and my coworkers that I have a blast with each day.
One thing that being on break for me has meant, is that I get a lot more freedom to really dive into creation when it comes to my blog.
My big goal for 2020 is to start accepting the first students into my as yet unnamed intro to money course. In it, I’ll be taking people that are wanting to take control of their financial situation in 2020 and giving them the tools to be successful.
While I’m creating that, I’m still going to be sending out a weekly blog post with a quick thought or tangible tool to help you think about how to win with money.
This week, I wanted to share the lessons we learned when we were using cash only.
You know, they’ve done studies that show that we are wired to spend more when it comes to buying with a credit card, and I definitely believe that. I also believe that the tendency to spend more also happens with a debit card.
We don’t spend using all cash anymore, but we did for a short time, and here’s what we learned.
First, we learned to feel the scarcity.
Spending with cash envelopes means that you budget out the money that you’d like to spend in each category for the month, then make your withdrawal in cash at the bank, and place the cash in your envelops. We used a super cheap receipt organizer for ours.
So it was like a small wallet that had a bunch of different tabs. Then, there it was. All of our cash that we were planning on spending for the month was in our envelope wallet.
When you’re placing the cash in your envelope, you feel the amount of money you have in there. Something is happening in your brain that helps you feel that scarcity a little more than when you just have a big pile of money sitting in the bank with a number represented by pixels on a screen.
The other thing I learned from cash was to pay attention.
Have you ever made a purchase and your cashier tells you how much you owe and you never really register how much it was because all you do is swipe?
I’m actually really terrible about this. It’s just a swipe, I don’t even know how much they said it was.
This was probably my biggest takeaway when we were using cash.
I paid attention to what the price of something was because I was going to have to actually pull out the money that I needed too pay for it.
So there was this whole series of events that was taking place that wasn’t happening when I was swiping. I was processing how much something costs, immediately reaching into my envelop to pull out real money and then experienced the pain of letting go of real cash.
The studies have shown that we feel the pain of letting go of that cash more than swiping.
Now, we no longer spend using cash and our cash envelopes, but I’m still grateful for those lessons that we learned when we were spending using cash.
Today, we use YNAB as our main tool to budget. With YNAB, we still have our money placed into categories. So when we spend, we aren’t spending based on a number of how much is in our account. We are spending based on our category balances, which is really the new way of budgeting with cash envelopes.
Are there still lessons to be learned by using cash?
Well, I think so. I wouldn’t take those lessons back that we learned while we were on cash.
In fact, cash is really good I think if you’re trying to get control of your spending and you’ve never had that experience of having to spend from the finite amount of cash that you have on hand at the moment.
So if you’re having trouble reining it in, what do you have to lose by trying cash?
Want a really good experiment to try this month?
Take your worst category. For me, it’s a no brainer. It’d be our dining out category. Take the cash out that you intend to spend on that category and only spend using the cash you’ve withdrawn.
When the cash runs out. You’re done. You’re also going to be wanting to really watch your cash as you go. You don’t want to run out too early.
Give it a shot. It’s a pretty great way to try using cash without having to completely rework the budgeting system you’re using today.
If you try this, or you’ve used cash in the past, make sure and let me know of any insight you gain from using cash.
Jared
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