American Family Budget: Going All-Cash, All the Time

Are you one of those people who routinely says “I never have cash” because you pay for everything with a credit or debit card?

That used to be me, for two reasons.

In college I never carried cash because I didn’t have any money, and that was that.

But then I got my first credit card, and everything changed.

So whether I actually had money or not, I could pay for things using my trusty little plastic rectangles.

No need for cash, right?

The last time I regularly paid for goods and services with cash – actual paper bills and metal coins – must have been when I was in high school.

(No, that wasn’t even as recently as ten years ago, but how kind of you to wonder.)

Eventually I used my credit cards for everything – paying the balance off at the end of the month of course, but whipping out that plastic for purchases large and small, from a week’s worth of groceries to a single ice cream cone.

Switching From Credit to Debit

Last year, my husband and I closed our credit cards and switched to debit. No more needing to remember to pay off the balance, but still spending money without a care because it was so easy.

We were both often caught without cash, sliding our debit cards at the drive through window or the coffee shop, or popping one down on the table to split a meal with friends.

[Read: American Family Budget: What It’s Really Like Living On a Budget]

Raise your hand if you’ve ever covered the whole check, pocketing your friends’ bills so you’d have cash on hand.

Did you wind up spending even more money that way? Me too!

Making the Move to Cold, Hard Cash

The financial class that we took in the fall – the one that led to us creating our written budget – stressed the importance of paying for things with cash.

Actual dollar bills. And fives, tens, twenties, fifties, and Benjamins.

Read: American Family Budget: I’ve Created a Budgeting Monster]

Using real paper and coin money would make it feel real, according to the class. We’d be less likely to spend as much of it.

Another potential benefit of using cash is a finite cap on spending.

If we take out $700 for groceries for the month, and we spend it all, there’s no way to go over that amount by accident.

You take $200 with you to the grocery store and no credit card, and guess how much you’re going to spend? No more than $200!

Dutifully, my husband and I totaled up the budgeted amounts in all of the appropriate spending categories (groceries, school fees, entertainment, household supplies, spending money, allowance, etc.) with a plan to pull that amount out of the bank a day or two before each month begins.

That meant withdrawing over $1,300 in cash from the bank all at once.

[Read: How to Add Manual Transactions in Mint.com]

The first time was the weirdest. I felt very strange. I haven’t seen this much cash since…maybe never.

It made me feel like a criminal, and I got nervously chatty with the bank teller.

I told her how I had just switched to an all cash budget, and she gleefully confessed that she had done the same thing recently herself, which made me feel better.

Still, as I left the bank, I felt like I had a time bomb in my purse.

I also felt weird paying for groceries with big bills for the first time. Lucky me, I had gotten the new 100-dollar bills, which look fake, like board game money.

They attracted attention from every cashier in the store and some of the customers too. I didn’t understand the fuss, really, because I didn’t even know what the old ones look like!

The Benefits of Moving to an All-Cash System

Gradually, I’ve gotten used to handling cash again. I’ve made the large withdrawal a few more times now, and I’ve noticed how the whole process makes me think more about money.

The very act of going in to the bank and greeting the tellers and staff, instead of just hurrying to the ATM, gives me pause, time to contemplate what I’m doing.

If the children are with me, they get lollipops, just like I used to when I was a little girl at the bank with my parents.

No longer just an absentminded swipe of a plastic card, this entire transaction means something.

Now it’s not so easy to pop into the coffee shop for a salted caramel latte when I know I have a finite number of bills in my wallet for such things.

[Read: American Family Budget: The Wake-Up Call]

On one recent afternoon I killed some time between errands at a popular discount store.

Where previously I would have picked up those extra sheets for the guest room and a new hoodie for my son, I actually stood in line to put them on hold so I could return later with enough cash to purchase those items.

That pause gave me time to think – do I truly want to buy these things? The answer was yes.

I came back later with my $40, pocketing the change and putting it right back into the appropriate envelopes.

So far the biggest amount we’ve spent using cash was at the grocery store.

Legend has it that you can make great deals by flashing cash when negotiating a larger purchase, for such items as say, a vacuum cleaner, or a new mattress.

I look forward to that day, because I’m a bargainer, and I love the idea of having cash on my side.

Next time on American Family Budget: Living with cash – the pros and cons of our envelope system.

Kim Tracy Prince is a Los Angeles-based writer who has a husband, two little boys, and a slightly unhealthy obsession with spreadsheets.  She publishes, kimtracyprince.com.