A closer look at the cash-only budget strategy

MMadelyn October 13, 2023 11:06 PM

If you're looking to take control of your finances, one method to consider is the cash-only budget strategy. This means that you use cash for all (or nearly all) of your spending. Sounds pretty old school, right? Well, this method has its benefits, but also a few drawbacks. Let's take a closer look.

How to budget with cash only

To get started with a cash-only budget, you first need to determine your monthly income and fixed expenses. Once you have these figures, you can determine how much money you have left for discretionary spending. This is the money you'll withdraw in cash at the beginning of each month.

You can then divide this cash into different categories or envelopes (known as the cash envelope system). For example, you might have envelopes for groceries, eating out, entertainment, and personal care. When the money in an envelope is gone, it's gone – no more spending in that category until next month.

Pros and cons of the cash-only budget

As with any budgeting strategy, there are both advantages and disadvantages to the cash-only method.


  • Helps control spending: When you can physically see the money leaving your hands, it can make you think twice before making unnecessary purchases.

  • Simplifies budgeting: No need to track every debit card swipe or credit card charge. Once the money is gone, it's gone.

  • Avoids debt: If you're only using cash, there's no chance of overspending and getting into debt.


  • Lack of convenience: In today's digital world, using cash can be less convenient than swiping a card or using a mobile payment app.

  • No credit history: Using cash won't help you build a credit history, which is important for things like obtaining a mortgage or car loan.

  • Security concerns: Carrying around large amounts of cash can be risky.

Tips for success with a cash-only budget

If you're considering a cash-only budget, here are some tips to help you succeed:

  1. Start small: Don't try to go cash-only all at once. Start with one or two spending categories and gradually add more.

  2. Track your spending: Even though you're using cash, it's still important to keep track of your spending. Consider keeping a spending journal.

  3. Use envelopes or jars: Having a physical place to store your cash for each category can be helpful.

  4. Allow for flexibility: Life happens, and sometimes unexpected expenses arise. Be flexible and willing to adjust your budget as needed.

  5. Revisit and revise: Review your budget regularly and make adjustments as necessary. Your budget should be a living, breathing document that changes with your needs.

A cash-only budget strategy can be a powerful tool for financial management. But like any tool, it's most effective when used properly. By understanding the pros and cons and following these tips, you can make the most of this strategy and take control of your finances.

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