How to Live a Cash Life In a Non-Cash World

When we were kids, money was a much simpler entity to manage; in fact it was downright easy back then. The process went like this: if our pockets were empty, and they often were, we went without. And if our pockets had something in it, we could spend what we had. And, here comes the stress-free part, how much we spent was determined by how much we had. Simple.

So, the decision process went like this. Can I buy a soda? Let’s see, do I have any money? No, I don’t have any money. Then the answer is no. I cannot buy a soda. Done.

Now, it’s a little more complicated.

Now our buying decisions are not based on how much we have in our pockets, or how much money we have in the bank, or how much money we can afford to spend, or how much we earn, or how much money is left in our budget, or is the thing that we wish to purchase priced correctly. Nope. It’s only based on — do we want it and do we want it now?

So, do I want a soda? Well, of course I want a soda. And I’m a grown man and I work hard so I’ll buy whatever I want. Because this is America. And I have three credit cards and a debit card in my wallet that says it’s America. So yes. Yes I can buy a soda.

And we buy. And it’s easy because we don’t really spend money, we spend numbers. Think about it: with little exceptions, it’s possibly to go a very long time spending, buying, and earning and never seeing the actual money that is flowing in and out. We just see numbers on a screen.

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Using a cash system is the only way to spend only what you have. Because with our credit cards we can spend until we hit our credit limit and with our debit we can clean out our account and push the overdraft limit dry before the red light comes on.

And the irony is that we’ve been conditioned to not think of these swipes of a card as real money. Yet, take actual cash from our wallet and we feel that psychological loss.

Using a Cash System

1. Establish a budget.
2. Create an envelope system. Create a physical envelope for each budget category. Now there will be budget items that won’t fit in the envelopes — automatic payments, etc. — so you keep those automatic and make categories for all that you normally use your credit and debit card for. These should include: Gas, Entertainment, Groceries, Clothing, Car Maintenance, etc.
3. After you’ve categorized your cash expenses, fill each envelope with the money allotted for it in your budget — if you allow $100 for clothing, put $100 in cash in your clothing envelope for the month.
4. Determine what is a weekly or bi-weekly (depending on how you get paid) expense and which is ongoing. So if you allot $50 a week for entertainment, then that will fill each pay period, whereas $25 a week for car maintenance will build until needed.
5. Tweak. During the first three months or so your system is in beta-test mode. There will be items you forgot, over budgeted for, or simply got wrong. Keep adjusting.
6. Once you’ve spent all the money in a given envelope, you’re done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can’t spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdraw more.
7. When it’s gone, it’s gone. Don’t be tempted.
8. Blow money. There’s also no problem in adding a “blow money “category — money to have a little fun with! As long as you and your spouse have agreed on it, you are fine. There should be no lying. Agree on your budget, agree on your fun money, and be open. Fun money can be anything you want it to be. There are no rules on that envelope.
9. Keep the change. Tossing your spare change in a jar is almost a mini savings account. It’s there for small emergencies and at the end of the year it’s not unusual for your change to equal $400 or more.