While reading an MSN Money article, I saw a question about budgeting, that interested me. As I checked the discussion on the message board, an interesting side conversation had started. One young man admitted that he had A.D.D. and that made sitting and budgeting very difficult.
To compensate, he would first set aside money that he needed for bills, then he would put money in savings. He started with as little as $25 per paycheck, but challenged himself to add $5 the next check, arguing that he could do without $5. Then, he took the rest of the money in cash. As he paid for his groceries, clothes, etc with cash, he was careful about how he doled out the money. When the cash was gone, he had to wait until his next paycheck.
One of the people posting on the board thought that was a stupid way to keep track of money. She didn't trust herself with cash and argued that he shouldn't be trusted with cash either. Instead of wasting cash, she put her monthly expenditures on her credit card. At the end of the month, she paid the card off and could easily see where she was spending her money.
To be honest, I was surprised by this woman's reaction. Cashing out your disposable income is a great way to keep control of your spending, especially if you don't have a lot of money.
When my folks were newlywed and poor, they would cash out all of their income that they didn't need for bills. Money for groceries, clothes, gifts, etc. was all in cash. When the cash was gone, they stopped spending. They have always recommend this method as a good way to control spending.
As they economy has struggled and car sales are down, I've gone back to doing the same thing. When I'm spending cash and not my debit card, I'm so much more careful. It's almost disturbing to watch the cash dwindle.
Keeping in mind that we have 5 children (ages 9 and under) as well and Wendell and me, I was really proud that we spent only $144.00 on groceries for the next nine days. This includes everything we need to eat for breakfast, lunch, snack and dinner, although we may need a milk run before the time is up.
So, how do you manage your money best? Does cash help you or tempt you? Can you use a credit card to keep track or is that "magic money" problematic?
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4 comments:
I think the cash method would be great, especially for someone who has a difficult time budgeting. I use credit cards, mainly to get the rewards, but don't have a problem budgeting or paying them off each month. I am also a Quicken junkie, watching all my accounts like a hawk on a daily basis! (I once had a $10 check to my mortgage company cashed for $10,000--YIKES! Luckily I was able to get it straightened out without too much hassle.)
Holy cow!!!! That's totally awful! I bet you were glad you were keeping an eye on that.
I prefer not to carry cash myself. If I drop it, or spend it on the fly, then I sometimes can't account for it...
When my dh got his first job out of school, we (he) used a small credit card (limit $300) for his expenses beyond basic bills (which I paid). At the end of the month, we paid it off.
I like the idea of using a credit card for acquiring points... tho, I don't do that myself.
I don't carry cash. I use my debit card. I keep careful track of how much I'm spending, and watch my bank account closely.
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