I talk a mean game when it comes to money — I actually look forward to getting our taxes done, I love checking my bank account daily, and nothing makes me happier than reaching a financial goal.
But here’s an embarrassing truth: I’m actually terrible at keeping a real budget.
I’ve tried everything: writing it out on paper, logging notes in my phone, using an app, and even tracking expenses in a calendar with my husband, Ben. But after a day or two, I go right back to my old method: Put everything on credit, eyeball the charges, and hope we can pay the full bill when it comes.
So in an effort to understand exactly where my money goes, I tried the cash-only method for a month. Here’s what I learned.
LESSON 1: WRITING A BUDGET IS LIKE RIPPING OFF A BAND-AID
After Ben and I wrote out every single expense — from Starbucks to takeout lunches to our kids’ school tuition — I was so overwhelmed I had to go lay on the couch.
Our family had just moved to a new house with a 74-acre farm, and this was the first time we reviewed our new finances. We vowed to set a real budget for the first time in our lives. (Again, embarrassing.)
We’d also go one month using only cash to see if it would help us spend less. For convenience’s sake, we didn’t touch any of our auto-pay items (our mortgage, electric bill, phone plans and so on).
Then we split our cash envelopes into four categories:
- Grocery and household shopping ($1,000)
- “Fun” money for me to spend on lunches, coffee and treats for the kids ($50)
- “Fun” money for Ben to spend on lunches, coffee and treats for the kids ($50)
- Family entertainment, including dinners out ($50)
LESSON 2: USING ONLY CASH REQUIRES SOME PREP — AND CREATIVITY
In theory, this should have been easy. In practice … it wasn’t.
For starters, I’d planned to withdraw my cash for the month from the bank, but then our whole house got sick. I forgot to go, and my husband didn’t have time, and I had to take a quick work trip — before I knew it, we were several days into the month.
So, we got creative. For instance, after preschool pick-up, I wanted to treat my daughter to lunch. But without any cash on me, we returned home and ate leftovers from the fridge.
The following day, my kids had after-school bowling club. I raided the laundry jar, my jewelry box and the car floor to scrounge up $6 in change. The bowling alley attendant was super patient as I counted out pennies to pay for snacks.
Like a lot of other things in our household, the preparation needed to make a cash system work fell primarily on my shoulders.
LESSON 3: PAYING IN CASH HELPED ME SEE WHERE I SPEND MINDLESSLY
Without the convenience of swiping my card, I realized how much I was spending on drive-thru coffees. On the day we had bowling, I really wanted an afternoon Americano, but since I had only enough cash for the kids' snacks, I skipped it.
When I did the math, I realized I was spending roughly $40 a month on quick snacks for me and the kids. The majority of my $50 “fun” budget was spent on a Starbucks cake pop here, a drive-thru side of fries there … not really the fun I planned for it to be. Using only the cash I had on hand made me mindful of my own spending.
LESSON 4: CASH-ONLY ISN'T ALL IT'S CRACKED UP TO BE
Here’s where I’m supposed to tell you that my month-long experiment cured my budgeting woes and I’m forever transformed, right?
Well, no. After attempting this experiment for a month and failing many times (what would YOU have done at the grocery checkout with four kids and a full cart only to realize you forgot cash?), I didn’t fall in love with the cash-only lifestyle. It was unnecessarily stressful, time-consuming and not really that helpful in cutting down our bills.
Ironically, the cash was burning a hole in my pocket, and I’d spend it faster.
LESSON 5: A BUDGETING SYSTEM IS ONLY EFFECTIVE IF IT FITS YOUR LIFESTYLE
I had thought that because we weren't budgeting every penny in cash, we were blowing money unnecessarily on credit. And while I got a reality check on my quick-snack habit, I also saw that I'm not the terrible over-spender that I thought I was.
Here’s my takeaway: A budgeting system is only effective if it fits your lifestyle. For us, keeping track of cash down to the penny wasn’t it. Paying with credit suits us because we spend consistently across our budget categories.
We’ll be using plastic a little more carefully (little charges here and there add up!). But overall, the flexibility that a credit card gives me — plus earned cash-back — takes a lot of stress out of my life, and that’s pretty priceless if you ask me.