Is It Best To Use Cash?

by Pam on September 10, 2010

There are all sorts of theories out there for people to try to rein in their spending.  Some experts recommend using cash to pay for everything as then it makes some people more aware of just how much they are spending.  It is somehow psychological, but if people use cash it is more meaningful to them than if they pay with plastic.

Others suggest using cash is easier for budgeting because you only take out so much money per month and once the cash is gone, you know you cannot spend anymore.  Using cash is also good if you have trouble paying off your credit card balances every month.

I don’t think there is one single strategy such as using cash that will work for everyone.  For me, using cash is not the answer as I am much less responsible with the cash that I spend compared to when I pay with my credit card or debit card.  This is because we keep track of our spending on our debit and credit card using Quicken, but we don’t keep track of our cash spending.  So because I am not entering it into Quicken, I feel like I don’t have to be as responsible for how I use it.  As a result, I seldom use cash and I seldom carry cash in my wallet.

The best thing to do is to figure out what works the best for you.  Try paying with cash for a while if you think it might help you to stay within your budget.  If it does not work for you, perhaps you might find it beneficial to track your spending through Excel or Quicken or another personal finance program so that you feel more accountable to how you spend your money.  Whatever you do, don’t expect that we will all find the same solution.  We are all very unique and what works for the next guy may not always be the best answer for you.

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