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Cash Budget

What is a cash budget, really? Does it involve getting rid of credit cards and living on nothing but cash? Is there anyone under 65 living this way? The answers may surprise you.

Mention the term cash budget and it inevitably conjures up questions like this. People tend to reject the idea of living on cash because it's a throwback to the old days. It's the old way of doing things and it's simply too inconvenient for most people's I want it right now mindset.

Most of us rarely use cash anymore, it's almost gotten to the point of being obsolete. Nowadays plastic reigns supreme and like most people the thought of cutting up your cards probably seems unimaginable to you - a kin to cutting the cord or removing the training wheels.

But here's the good news...

Unless you're an extreme shop-a-holic or have some other compulsion for over spending and have racked up more debt than you can pay off in a reasonable amount of time (2-5 years)

- YOU DON'T HAVE TO CUT UP YOUR CARDS -

With a little discipline and planning you can implement a cash budget without having to give up your credit cards as long as you can reasonably control your spending or better yet limit your use to emergencies only.

Let me start by finishing my thought about what a cash budget actually is. A cash budget is simply a money management method where you pay all your variable living expenses in - you guessed it - cash. The are many variations of cash budgets but the two I'd like to talk about are the money jar budget and the envelope budget.

Envelope Cash Budget

The envelope budget system uses envelopes that represent different expense categories such as rent/mortgage, food, electric and transportation. Each envelope is filled with the alloted amount for that expense category and subsequently used to pay that expense. One of the main benefits of the envelope cash budget is that is very interchangeable and flexible. You can read more about the traditional envelope budget system or check out the online version.

Money Jar Cash Budget

The money jar system works the same way as the envelope system above the only difference is that it employs 5 broader variable expense categories and of course the use of - you guessed it - jars instead of envelopes. This is a simplified cash budget which like the envelope system is also very flexible but much easier to use and implement in my humble opinion. You can read more about the money jar system. For those of you in the UK there is a really cool version of the money jars online best of all it's FREE.

Benefits of a Cash Budget

100% Free - You can create a budget quickly and easily but best of all it won't cost you one red cent. See create a budget for help setting up your all-cash budget system.

It's flexible - Once you've setup your budget it can be modified and adapted to fit your ever changing needs and finances.

Controls spending - There's still no better way to prevent over spending than an exclusively cash budget. Since your limited to the money in your envelopes or jars its virtually impossible to over spend. The phrase, You can't spend what you don't have, must have been coined by someone living on cash.

Let's you build up savings - Using the "Pay yourself first" strategy to build savings ensures you put whatever you can afford in the bank and that deposits never get missed or used for something else.

Gets you out of debt faster - Living on a cash allows you to commit a certain percentage of your total net income toward debt while not creating more debt. 15% is a good rule of thumb for this. More importantly the cash system ensures you will not incur more debt as you pay down your debt.

Modernized Versions of the Cash Budget

While living on cash may not be for everyone, the benefits are too great to pass up. This is a time-tested method that works and shouldn't be dismissed just because it is a little inconvenient. Fortunately, this old budgeting concept has been modernized, see online budgeting system and personal budget software.

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Table of Content

How to Save Money - How to save money in 4 easy steps. Reach your ultimate savings goal by following these 4 surefire, money-saving steps.

Save Money Around the House - Want to turn your home into a money-tight, energy-saving dynamo? You can by following a few practical money saving ideas. Find out how you can save on everything from gas to groceries.

Frugal Living - Think frugal living is just for cheapskates and penny pinchers? Do you believe that living like a vagabond is the only way to be frugal? Frugal living isn't about cutting back on life's little luxuries just to save a dollar. It's about living within your means, moreover it's about living well within your means.

Budgeting Tips - Looking for budgeting tips that work? Basic budgeting guidelines plus top 10 budgeting tips to help you set up your budget that works.

How to Create a Budget - Learn how to create a budget that not only works but one that you can actually live with! A good budget is one that allows you to easily manage your personal finances without cutting out any of the things you enjoy in life.

Personal Budgeting Strategies - Want to know which personal budgeting strategies are most effective? Here are three different personal budgeting strategies as well as the pros and cons of each strategy.

Living On A Budget - Think living on a budget is only for people on a fixed or low income and couldn't possibly apply to you? Are you worried that a budget will only reduce the standard of living you currently enjoy? Not worth the hassle?

Personal Budget Software - Need help finding quality personal budget software? How about a program that's both user friendly and makes budgeting fun? Oh, and you probably want
it to be cheap too, right?

Debt Management Tips - Looking for debt management tips that'll help you get you out of debt faster? Want to minimize the amount of interest on your debts while your still paying them off? These simple, practical tips will help you do just that!

Getting Out of Debt - What's the best way of getting out of debt? Are you confused about all the different debt solutions available? If you're in debt and considering options such as a debt consolidation loan, credit counselling or restructuring your mortgage to include some or all of your debt...READ on!

Make Extra Money Online - Want to make extra money online? Here's is a listing of honest, legitimate ways to make extra money online - no get rich quick schemes here.

Recommended Reading - Here are some highly recommended books you might be interested in reading. I've learned so much from each and every book listed here.