Why the cash budget sucks…and why you should do it anyway

Perhaps you’ve heard of this thing called a cash budget, where you only buy items with cash you have on you at the time, no credit or debit cards, no checks. I’ve lived on the cash budget and can attest to how much it sucks –

Every. Single. Day.

But I can also reveal why you might be interested in trying it anyway.  But first, what you may or may not already know:

3 reasons why the cash budget sucks:

1. Math

One reason only spending cash on items you need sucks is because of math. I never need just one thing; I normally need several things at once.

Buying multiple items means getting some idea of how much those items will cost when you have a limited amount of cash in your wallet. It can be ten or three hundred dollars and it won’t matter because at some point you are going stand like a tree in a store guestimating how much the pile in your shopping cart costs and hoping you will have enough at the register.

Spending with a credit card never gave me these math moments. The anxiety of trying to add $17.84 and $22.99 (plus tax) while in the middle of the laundry aisle.

If you do a cash budget, you can get all technical on your phone’s calculator or try in your head, but you will have these moments. Your brain that hasn’t had a math class in a decade will freeze and will be no help at all.

Reason #1 will lead to Reason #2 that cash budgeting sucks.

2. Being ‘that person’ at checkout

I feel that all people look at you oddly while you get out your cash envelope at the checkout. The envelope is usually from the bank and tattered.

Instead of swiping your beautiful, custom photo credit card from your super cute Target wallet!

Before doing the cash budget, I would actually get compliments on my credit card that had the photo of Scott and me in Germany. Surprisingly the tattered bank envelope gets me nothing.

So there is everyone in line watching me dig for 44 cents out of the tiny change wallet into which no person’s fingers can fit, and then I become That Person.

The horror, the humanity, I am the person with not enough cash to cover my purchases because – see Reason #1. Ugg! I must now suffer the humiliation of returning an item while the watchers no doubt think I am poor due to some gambling habit or shoe shopping addiction.

Dang it! I also needed that item now going back to sit next to the register while the cashier gives me a new total. I must now get 73 cents in change. The watchers wait.

No doubt a therapist can delve into your inner being for $225 an hour to learn why this situation might be embarrassing. I will leave that to the therapist and let you learn for free that this situation is in fact embarrassing or at least very annoying.

Which brings me to Reason 3.

3. Memory

To do the cash budget, you must remember to bring your cash. I am not a very old person.  I do think my brain works from time to time.

But with life, kids, and getting out of the house with both my shoes and wedding ring on, I do sometimes get forgetful.

If you do the cash budget, there will be times where you arrive at the store only to realize your ugly, tattered cash envelope is in fact at home on the kitchen island – ah!

Who has time for this?

Back home you go, where you may deeply rethink your need for the several items you were out to get in the first place…

Which happily brings me to why:

Doing the cash budget is worth it.


The annoyances of the cash budget are worth the hassle when you realize how quickly your money starts piling up around your home, er bank account. My husband and I did the cash budget for two years solid and I couldn’t believe how much money piled up in our savings.

It blew my mind.  When you’re stuck in the store doing your Math –  occasionally returning an item, paying attention to what you are spending –  the rest of your money secretly has late night parties and multiplies sight unseen.

Why this happens is backed up with lots of research. One example is a paper published by the American Psychological Association, which concludes that people spend less when spending cash vs. credit cards and gift certificates.

The reason is in part because people have a higher aversion to spending cash.  It’s clearer that you are spending money vs. the less impactful swiping of a credit card. The researchers call this the “pain of paying.”

Upping your pain of paying means, you will, in fact, spend less. You will end up having more money in your bank accounts – the goal of the cash budget.

I cannot emphasize this reward enough. Give cash budgeting a try for three months, six and watch your accounts grow.

I don’t guarantee that you’ll be doing cash for life, but you’ll want to continue until you reach your goal.

The reward

Money for money’s sake is not enough reason to do anything.

Money is not a good enough reason to suffer the pains of a cash budget. A million dollars in a retirement fund is great, but it won’t give you a good memory or fun with your family or friends. It’s also too far away for most to be a motivator.

I love to travel, from a girls’ road trip to an international getaway. Doing the pains of the cash budget allowed us to pile up cash for things we needed, but also things we wanted.

I will always want to travel. Those travel memories stay with me forever and never wear out and get dull. I’m not truly happy unless a trip is somewhere on the horizon.

Travel might not be your thing, but I encourage you to attempt the cash budget with some personal reward in mind. I’d also encourage you to have a reward that is not a thing. Things get old, break, have to be dusted, etc.

Atlantic Magazine was writing about psychology professor, Thomas Gilovich and Amit Kumar’s work in experiences and happiness when they wrote,

Waiting for an experience apparently elicits more happiness and excitement than waiting for a material good… By contrast, waiting for a possession is more likely fraught with impatience than anticipation. “You can think about waiting for a delicious meal at a nice restaurant or looking forward to a vacation,” Kumar told me, “and how different that feels from waiting for, say, your pre-ordered iPhone to arrive.”

If you are going to be That Person in Line, then anticipate celebrating paying off a credit card with a great party. Or plan on attending an awesome concert with friends after you’ve made that last car payment. Whatever makes you anticipate the future with joy.

So while living the cash budget sucks, suck it up buttercup and give it a try!

Question: What do you think – do you love or hate the cash budget? Or have you not tried it out yet? Please leave a comment below.

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