Finances & Money

Ways to Save Money #4: Pay with Cash

A short time ago, I wrote a review of an eBook called “Save to Quit“. Along with the book, you get another eBook titled “500 Ways to Save Money” that gives general saving ideas as well as ideas across a number of categories. This article is part of a series highlighting the money-saving ideas, one at a time. Note that I don’t get any referral income for these articles. Check out the rest of the Ways to Save Money Series here.

Number 4 in the “500 Ways to Save Money” eBook highlights a method I’ve tried using in the past: Paying with Cash.

The idea here is that by paying with cash, you’ll be more conscious of the amount you’re spending and also that you probably don’t carry your credit limit around in cash. There’s many people who live their lives perfectly fine without credit cards, but they also have the convenience of debit cards. This “way to save” is about using cash currency alone, not debit cards, not credit cards, not bartered chickens or goats. Just cold, hard cash.

Personally, I haven’t carried much more than $2o in my wallet at any one time, except when we’re taking a big trip. Even then, I’ll only carry $80-100 because I know I have credit cards and my ATM card if I need it.

But the main reason I don’t carry much cash is because I’ve tried to live in a cash-only world, but I couldn’t hack it. The major benefit of using cards is I can track my spending easily. With cash, I pay $5 for a $4.09 item and what happens to the 91 cents? I’m too lazy to write down all my expenditures and when I throw change into a jar, the exact amount I spent vanishes as it’s mixed in with all the other coins. But as with many of my other articles, just because I can’t do something doesn’t mean you shouldn’t try.

How to Live Card-Free

If you have the discipline, you really can live without active credit or debit card use. Here are a few helpful hints:

  1. Have the discipline to keep an expense journal. It can be a small notebook, your cellphone (most have notepads), or a PDA. Just make sure you write down every little expense, even those quarters you gave to the homeless man or the pocket change you dropped in the Salvation Army bucket. It would also be valuable to categorize each expense (dining, groceries, personal care, charity, etc.) as you go to help with budget planning.
  2. Plan ahead for how much cash you’ll need. Whether you’re withdrawing money from the bank or an ATM, you’ll want to know how much cash you need for the week and only take that much out. Many people use an envelope system where you take out a wad of cash for the whole month’s budget and divide up the bills among labeled envelopes for each category. If you’re going all-cash for the long-haul, then I suggest using envelopes.
  3. Also have the discipline to stay away from the ATM. Just like your budget is only as good as your willpower, so too is your plan to be cash-only. If you run short on cash for dining out, entertainment, or even essentials like gas or groceries, you need to stay away from the ATM or else it will spiral into a pattern of just getting some more cash out when you feel like it. Then, your budget is worthless. Instead, keep updating your budget so you can plan ahead. If you come up short on an essential, then take money out of your entertainment envelopes.

Those are just the general guidelines for living credit card free though. As you progress into the cash only society, you’ll find ways to make it work that are unique to your own lifestyle. You’ll probably expose other benefits such as spending less and maybe even discounts with businesses who prefer cash to credit. Try giving it a shot and see where it goes from there.

See the rest of the Ways to Save Money Series here.

About the author

Clever Dude


  • I’ve admitted it before and I will admit is again: I don’t do that well with a cash-only plan simply because I have handled too much cash that wasn’t mine over my lifetime. I honestly have a hard time seeing cash as “mine” even when it is. I do love auto-draft for the utility bills and mortgage, then using a debit card to keep track of my other spending 🙂

    As for what to do with “the other 91 cents” I usually carry that in my pocket until I get home at night then toss it into a change jar. A few times a year I take my change jar in and deposit it all back into my account. So, it’s not really lost…just sidetracked for up to 4 months at a time.

  • Thanks for the link-love…
    I actually went ‘cash only’ for a few months in 2007… Not a big deal, really. I just kept a couple hundred bucks in my envelopes. The only reason I went back to debit card was that ING started giving me a bonus when I used it..

  • I don’t see any upside to using cash. We use rewards credit cards from Citi, Discover, and Chase. We pay off the balance every month. We can easily determine where our money has gone. In the past 12 months, we’ve gotten $1,390 back from the $36,177 we’ve spent (3.84%). That includes over $100 on a new refrigerator and $40 on a used car.

    I think it’s sad that people feel they need to use cash because they don’t have the self-control to not buy things they can’t afford.

  • I like walking into starbucks or some store and the girl behind the counter says she’s so sorry, but they cannot take credit cards right now.. the machine is down or whatever. The upside- Cash is always accepted!! No machine will be down. As far as keeping track of the change from a $4.91 purchase and paying $5… easy. You don’t have to… just decide how much you’re going to allow yourself that week or 2-week period to use for entertainment, eating out, etc… and stick it in an envelope (how quaint!!) when it runs out, guess what? it runs out!! ooh… that’s really complicated isn’t it?

  • Sometimes using cash makes sense though cash back credit cards can actually be cheaper, as long as you don’t pay interest, late fees, etc. on the card. Some of the better ones let you basically save 3% or more off certain types of purchases, which can add up to a significant amount over time.

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