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Save money by spending cash? Yes, absolutely.
When the topic of saving money arises, the emphasis is often placed on how to save money via expense reduction. For example, don’t buy those shoes, cut the cord and get Netflix and things like that. Those ideas are all well and good, but most likely you’ve already tried them. What if you tried a different method of saving that you haven’t used before? Like saving money while you spend it?
I’ll explain below…
Some years ago, I came up with the idea to create a spending tax on myself. I decided that whenever I used cash, I would save the change I received back. The plan was to save all the change that amounted to $1 bills and below. Saving $1 bills didn’t work out so well, so I switched to just saving the coins, that was more realistic.
Now keep in mind, I did this some of the time but certainly not most of the time. Then one year later, I’m going on vacation and I was a little short on spending money. I came across that self tax and put it into one of those money machines in the grocery store. Lo and behold I ended up getting $200 back! That’s a significant amount of money and I wasn’t even trying!
Then things really started to change……..
After I came back from vacation, I rededicated myself to the spending tax and I was able to save a few hundred dollars in almost half the time. Next, I started to plan out my expenses for the week. I withdrew all of my daily spending money for the week and stuck to a set budget. Even with this limitation, I was still able to save some extra change.
By using cash, I saved money on the front end by limiting my impulse buys and credit card purchases. And I was still able to save money on the back end by continuing to save the change I received from spending cash.
Long story short, over the course of a year, this translated to thousands of dollars in savings.
I know that what you spend is going to be in proportion to what you have in your bank account. That’s understandable, and some people will have less and some others will have more. Either way, you will still be able to save a lot of money in the process without feeling like you’re sacrificing your quality of life.
Just implement the steps little by little and watch how it adds up
Step #1 Start using cash more often and your debit & credit card less, and save the coin change you receive in return.
Step #2 Make a budget and start using cash to cover your everyday expenses throughout the week. You could start with one thing that is fairly predictable like groceries or gas money and expand from there.
Step #3 Start expanding your cash spending list and watch your savings grow even more.
Step #4 Limit your spending to the cash you have on hand and only use your credit card or debit card when it’s an absolute necessity. This is the hardest step, but once you implement it, you’ll really start seeing the savings add up
An Extra Tip
You don’t have to make a drastic change right from the start, just take incremental steps and let the financial rewards be your motivation to keep expanding your savings plan. It’s your plan, adjust and tweak it as necessary.
What’s Next….?
If you enjoyed that tip, take a look at how to make better financial decisions. It’s a quick read and may go a long way in helping you reach your financial goals — Learn More Here