Money Bytes: Stop Using that Debit Card

Here’s today’s budget tip: Stop using your debit card! Stop it for a little while and see what a different it makes.

ATM cards are convenient. And debit cards can be used nearly anywhere. When we spend with them, we are much less cognizant of just what we’re spending and even more importantly…what’s left in the bank. Try switching to a cash budget for the next week or two and see what a difference it makes.

Living on a Cash Budget:

Try using money jars or budget envelopes and taking the cash that you’ll need out for the week.  It’s a real eye-opener for most people! Factor in food, gas or other transportation expenses, and other things you’ll need during the week. This budget should not include your fixed payments such as rent, utilities, and loans or credit card payments. You’ll want to manage that separately. We’re talking about the money you spend regularly and ‘live on’.

Tip: Be sure to have a separate envelope or jar with a small amount of money for overflow expenses. $10-$50 usually covers is.

Don’t use your debit card at all! Don’t use credit cards at all!

It might take a bit of tweaking to assign the right weekly budget but you’ll soon get the hang of it.

By seeing how much money is left in various parts of your budget you’ll become much more conscientious of your spending. You’ll realise you can’t afford more than $x for lunch or for groceries. Most people find that they go from over-spending to having money left over because they think more about how much money is left for spending. Instead of living above your means or right at your means, you’ll have a better chance of living below your minds, resulting in being able to pay off debt and save money. If you start doing this and allocating an amount to your savings account each payday you’ll also see that it’s much easier to save.

Do you treat money differently when you can see and feel it in your hands? Feel free to share your opinion and outcome of this or similar experiments in comments.

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