An All-Cash Plan with Benefits and Drawbacks

Many people regularly adhere to a cash-only budget. The fundamental question to raise is whether this budgeting approach is actually practical. People are becoming more frugal and looking for ways to save money everywhere they can as the economy continues to decline. Consider these benefits when you consider a cash-only budget.

Benefits of

1. A cash budget might make you more conscious of your daily spending habits by limiting your access to unnecessary items. Since you will not have access to that magical piece of plastic (a credit card), you might discover that you spend significantly less on some items.

2. It will make you really conscious of the money that is slipping through your fingers. You can avoid going over your budget if you allocate a certain amount to each expense. You will also start to question how much money you spend on a regular basis. For instance, you should not buy name brands when you can obtain identical products (without the brand name) for significantly less money.

Thirdly, if you stick to a cash-only budget, you will not have to worry about those pesky credit card fees and interest charges that can build up quickly. We all know that using a credit card to pay bills is convenient, but when money is tight, it is easy to go overboard. You could be tempted to pay late, which would result in additional fees and interest added to your account every day. The "Big Sin" happens when you just spend more than your monthly allowance or financial benefits. You will not have to worry about this as much when you are dealing with cash instead of credit cards because, well, when the cash runs out, it is gone. Similarly to how a credit card could make you buy unnecessary items, this will help you control your spending.

4. You could also notice that you are not dining out quite as frequently as when you use a credit card. In an attempt to cut costs, you often peruse the less expensive menu options when you do eat out.

5. You will be able to observe your savings once you pay all of your payments at the beginning of the month. An excellent bonus, indeed.