If you want to figure out how to spend less money, the best way to is go entirely cash. Don’t charge a single thing to your credit card, don’t write a single check, and don’t pay for anything with anything else other than cash.
Going 100% cash is hard. It’s hard because we have grown accustomed to the features and conveniences of credit cards. We have access to a tremendous amount of capital with the swipe of a card and often find ourselves spending money we probably wouldn’t have if forced to carry around the cash to pay for it. We will be leveraging that same psychological feeling when we practice the art of going 100% cash.
The main reason this will save you money is because cash is real, whereas credit isn’t. There’s a reason why casinos use colorful clay chips rather than money - you abstract away how valuable the cash representation is. A $100 chip looks just like a $1 chip, it’s just a different color. Your $5,000 credit limit is personified by a smiling teddy bear on a plastic card with a magnetic strip. Your purchases will feel more “painful” because you have to hand over real money and so you’ll naturally spend less.
Another reason you’ll save money is because you generally won’t carry enough money with you to make huge purchases. Tempted by a $300 purse or a $500 Onkyo receiver? Unless you are rolling with that much cash in your wallet, you won’t be able to buy it when the urge strikes. You’ll have to go to the ATM, withdraw the money, and then return to the store if you really want it. By then, the urge will likely have subsided.
Try going entirely with cash for a week or even a day, you’ll notice that your spending will have fallen.
Tags: Cash, Frugality, Saving Money
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