Written back in 2008 when GVO had one of her TV shows. Cash is King as a budgeting tool, is a message from many Financial Mavens.
My wife enjoyed watching Gail Vaz-Oxlade and her show where she helped folks who are in dire financial situations by helping them control their spending. The result, after Gail has studied the spending habits (and the family’s lifestyle), is she would give them their discretionary spending budget in Mason Jars, which held the cash for them, to show them just how much they had. The family was not allowed to spend more than what they were given, and that was Gail’s challenge (she rewarded them if and when they succeeded). From this we learned pretty much every week, Cash is King.
Cash is King
In a lot of businesses these days a favorite expression is “Cash is King” to point out that companies that have cash assets, are usually stronger companies, but for this argument, I believe that Cash is the King of budgeting tools.
If you are having spending issues, you must divorce yourself from your credit cards and especially your debit or direct withdrawal card as well. This is how I lived more than half of my life, since I didn’t have a credit card ’til I was into my twenties and the entire debit system didn’t come into play until my early 30’s, (heck Sunday shopping is a new thing to me, but let’s stay on topic).
Take care of your large bills on your budget and pay them however you do (cheque, on line, or in the bank), but your discretionary spending like:
- Mad Money (coffee, eat out, etc.,)
These (and others you can think of) you should use cash to control. The idea is that once the cash is gone, you can’t spend any more.
Do I Practice What I Preach ?
This is how I lived as a student (and every other one of the folks I know of my age, tell the same story), if on Monday you looked in your wallet and you had $10 to last ’til Friday, you figured out how to live on it, and that was it. You couldn’t cheat, you couldn’t overdraft and you didn’t put it on a credit card for later payment, you lived with it.
I am attempting to live this frugal lifestyle now to slow down some of my “free spending” bad habits that I have picked up over the years, and it does seem to be helping out a little.
Remember, cash is the ultimate budgeting tool, whether you use mason jars, envelopes, your sock drawer or whatever, as your storage area.