Did you know studies show that you spend about 12-18% less money when you use cash? When you use cash your brain emotionally registers the pain of saying goodbye to your money. One study at McDonald’s showed that folks spent 42% more! When you can use a card at a vending machine, it’s $178 more!
MIT, Stanford and Carnegie Mellon teamed up to do a bunch of MRIs and research on the issue. Brain imaging studies can see the pain centers of the brain being activated when you use cash. They are not activated when you use plastic.
So, use cash. Not just because I said too, but because science did too. It’s basically a guaranteed way to save money! That’s why I send my clients gifs like this almost everyday!
Now, I also suggest you use an envelope system when budgeting. When you make your budget (or I help you), we will identify which categories will work best for envelopes.
When you pull that money out in envelopes, you know those categories are taken care of. That gives you peace of mind! If you’ve got money in your envelope for food until your next check or the next month, you’re going to rest easier. If you’ve got gas money or kid haircut money set aside, you don’t have to worry when that expense comes up. Moreover, you don’t have to worry that you’ll accidentally get spend it when it’s sitting in your bank account.
So, based on your budget, create envelopes for the items that would be well suited for cash. That would be really nice to know are covered each month. Then, pull that cash out each pay period as necessary and put it in the envelopes. You’ll have to plan your purchases so that you take cash with you. Don’t worry, you’ll get used to it! The money in the envelopes is only for that category. If you have some leftover each month, great! You are an amazing budgeter. 😉 You can either change the amount next month, spend it on something nice for you & your goals, put it toward debt or leave it in and take out less the next pay period.
There are many negatives people come up with when it comes to the envelope system. Some of them may be valid-ish. However, we’re not trying to be “smart” here. We’re trying to form discipline, be really wise and make new habits. We’re trying to modify behavior. It’s like why we want you to stick to an exercise program when you’re trying to get in shape. We’re not going to be willy nilly, we have a plan for a reason!
So, you may not need envelopes forever but we’re going to use them, inconveniences and all, until we get a real hold on budgeting and make great progress toward goals.
If you need help creating a budget and implementing the envelope system, click the work with me button up top and let’s get started!