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Have a budget? Stick to it this Dezemba. Try this.

1 December 2023
3 minute read
Man shopping at grocery store

Have you heard of the cash-only diet? It’s great for your budget! The cash-only diet celebrates bulges (not like those other diets), rewarding your smart money moves with a bulging bank balance. Which could be one of the best ways to start the new year! We take a look at why and how you can stick to your December budget by following the cash-only diet!

The cash-only diet explained

Quite simply, you avoid overspending and debt, by spending only the cash you have in your wallet. You use actual cash – bank notes and coins – to pay expenses such as food, clothing, entertainment and transport.  Regular debit orders for expenses such as insurance and a home loan are still paid via debit order. The cash-only diet is also known as cash-stuffing and the envelope method.

Why? Not only does using cash only make it hard to overspend (you cannot spend if you have nothing in your wallet), the theory is that paying with cash is more painful than credit because it is an instant loss of money.  More pain means we are more mindful of how, when and how much we spend!

Using cash to pay for goods is not new, but it fell in popularity when credit cards and later debit cards arrived. However, successive generations who have struggled with debts have used cash-only as a way to balance their budgets and avoid too much debt.

Bottom line: Cash-only diets make it harder to overspend and make us more careful spenders. This is good for sticking to a budget, and especially good in December when there is temptation to spend more than in previous months. For many, cash-only diets save budgets, reduce spending and debt, and can even increase savings.

Just what your budget needs for December

The cash-only diet is something different for your money. Unless you practice it already, this money diet is a change. Overspending is common in the holiday seasons, so If you have struggled to stick to your budget in past Decembers, changing things up could be just what your money needs to last the month.

How to put your December budget on a cash-only diet

Although the cash-only diet is quite easy to understand and follow, you’ll need to do some advance planning to make sure you have enough cash to last you the month.

Update your budget

This is your normal budget of income and expenses, updated to include any extra spend during the holiday season. Designate some expenses as "pay with cash-only" such as food, clothing, gifts, eating out and transport. All your debit orders run as normal.

Have a family meeting

Let your family know what you are planning and why, and how it can benefit everyone in the form if less debt and less stress. Make sure you all know exactly how much is available for different items or each week.

Lock your credit and store cards away

Keep them in a safe place, out of reach, out of your wallet, out of temptation!

Top tip: To prevent a situation where you succumb to cards and credit at the till to avoid the embarrassment of removing items from your shopping because you are overbudget, keep a running tally as you shop so you know that your cash will cover the items you are buying.

Cash cons

There’s a lot to recommend a cash only diet, but there are some disadvantages of using cash.

  • If your cards offer rewards you won’t qualify for them using cash only!
  • There are cash withdrawal charges, which you should keep an eye on. They vary from bank to bank and account type, such as R5 per R1 000, which you should include in your budget.
  • You need to keep cash safe – if a criminal targets you and steals your wallet, your cash is gone, unlike a stolen card that you can cancel
  • Some items will need to be paid via eft or debit order or electronically – not all retailers and vendors accept large sums of money or cash, for example SANParks and online retailers

You should also bear in mind that ditching credit cards and store cards completely could affect your credit score and there will be no record of how you manage any short-term debt.

Be aware of the cons of a cash-only diet and keep safe, but also be prepared to try new things with your budget to help you become better at managing your money.

A change for your money may be just what it needs

You know the saying – the definition of insanity is doing the same thing and expecting a different outcome. If that applies to you and your budget, or you just want to become more financially disciplined, why not give the cash-only diet a go. It could be the finance flip that sets you up for a financially independent and money worry free 2024! 

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