How To Switch to Cash Only for Your Budget

Woman taking cash out of wallet
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If you are having a difficult time sticking to your budget, you may find it beneficial to switch to cash only for a few budget categories. It is important to carefully consider the things you will need to do in order to make switching to cash successful. There is something that is different psychologically when you use cash instead of a check or a debit card to pay for something—you realize just how much it really costs.

Choose the Categories to Switch to Cash

The first step in switching to cash is to determine the categories that you should switch to cash only. The most logical ones are the ones that you are consistently overspending on. This may be groceries or entertainment, lunches out or clothing. Everyone has different areas that are problems. Once you know what yours are, you should switch them over to cash.

Stop Using Your Debit Card for These Categories

The next step is to stop using your debit card or checkbook to pay for anything in those categories. This means no matter what. Period. If you can’t do that, then don’t carry your debit card with you for a few weeks, so that you break the habit. If you use your debit card, you’ll take money out that you should be using to pay the electric bill or for rent. So you must keep this rule. You can leave your debit card at home if you know you will give into temptation.

Create a System to Separate Cash and Track Receipts

You need a way to track your cash purchases or at least keep the amounts of cash separate from each other. One simple way to do this is to use the envelope system. You put the correct amount of cash into envelopes labeled with each category, and then you can put your receipts into those envelopes so you can see where you spent the money at the end of the month. Another way is to keep a running ledger as you spend the money. The envelope method is a lot simpler.

Set Up a Time to Take Out the Cash

You need to get the cash and separate it into categories. This may mean a trip to the bank or the ATM on payday. You can request that the teller gives you the money in the correct denominations so that you can easily separate the money into the correct categories.

Plan Ahead When You Go Shopping

You will need to learn to plan ahead. Generally, it’s not a good idea to carry huge amounts of cash around with you all of the time. So you leave your grocery money at home unless you are going to the grocery store or you take $20.00 with you to work if you plan on eating out that day. This will also help to cut back on your impulse purchases.

Stick to Your Limits

You will need to have discipline so that you do not continue to spend in one category once the money is gone. Again this means that you do not use your debit card or your credit card to cover shortfalls. However, you can switch money between envelopes if you find that you have overspent on your grocery budget, but you are out of food on the twentieth.

Adjust Your Categories 

You should adjust your budget once you have followed it for a few months. You may find that you don’t have enough budgeted for groceries, but you always have money left over in the gas category or you that you may need to sacrifice some of your entertainment money so that you can eat all month.


  1. Using cash may not always seem very convenient, but it is a great way to stop yourself from overspending. It causes you to think about your purchases, and consciously consider how much you are spending. This can really help you to stop using your credit cards as well. If you need to make online purchases, you may want to use Google Wallet to separate the categories from your regular checking account.
  2. You may want to use an expanding pocket file that fits into a purse to put your cash in. This puts it all in one place, and so it is easier to keep track of, but it may mean carrying all of your cash, so it might not be the best option if that makes you nervous.
  1. If you are married, budgeting as a couple can be very difficult. Cash can help make budgeting easier. You can divide the money between your individual categories, and leave the grocery money or entertainment money in a place where you can both access them when you need it.