CEE Standard: Saving
Challenge your students to use only cash for one week and see what the experience is like for them. The cash-only method is a great way to teach budgeting–the tactile experience of handling money makes teens think about their money and to be purposeful with it.
It seems like there’s a new app, software, or strategy launched every day to help you save. Some of these strategies might be effective, but they usually require downloads, financial commitment, or disclosing information like your bank account number to another source. Let’s face it, apps such as Venmo or Zelle make transferring money simple.
There’s a better way to save money, and a much simpler way to become totally in control of your finances. Spoiler alert: It’s the old-fashioned way. I haven’t been able to find a single app out there that beats the original, old-school budgeting strategy: Ditch the credit cards, use a bank checking or savings account, and exclusively use cash.
Benefits of Cold, Hard Cash
When I say exclusively, I mean it. You withdraw cash and use it for all of your expenses, then withdraw more when you run out. On average, I’ve been spending about $300 less per month without actively changing any of my habits.
The two main reasons people don’t like using cash are that first, it can be mentally stressful to decide what amount to withdraw from your savings; and second, that it also can be chancy to walk around with your cash and run the risk of it being stolen or of dropping it. The latter of those issues is (in my opinion) can be mitigated by not carrying too much money at once and storing your money in a discreet place. But the mental hurdle of having to come up with a budget and stare that number in your face can be daunting. I didn’t want to do that, either, so I tried a slightly different strategy: Instead of writing down all my expenses and forming a number from what I should be spending, I decided to withdraw just $200 at a time. No connection to an assigned budget whatsoever. I realized that I didn’t necessarily need a concrete budget because using cash already made me want to spend less.
I was much more conscious about my purchases, so the $200 lasted me about four days longer than I originally thought it would.
It might seem counterintuitive to use cash at all when you have a card handy and some budgeting app to monitor the card. But when you’re about to spend a lot on something you might not necessarily need, what’s more likely to make you reconsider this decision — mindlessly swiping your card or handing over all the cash that you’ve withdrawn for the week?
For me, it’s the latter. And even more so, it’s the small purchases that may have an even greater impact. You might not even think twice about getting the large popcorn at the movie theater for an extra $4 if you use a card, but you might consider getting the medium when you’re thinking about how to best use that $20 in your pocket. Those little decisions add up very quickly.
What’s the Real Cost of a Latte Fix?
For example, when I have a credit card, I almost always buy a larger-size coffee than I do if I use cash. That dollar or two makes a difference to me when I’m handing over bills, but doesn’t feel like a big deal when I swipe. And then, if I get the smaller coffee five days in a row with cash, I’m essentially saving enough money to get two “free” coffees at the end of the week that I wouldn’t have had if I used my card. (Though remember, they’re not technically free since you had to buy five to get them!)
Withdrawing cash can be scary. It forces you to engage with your money — literally — while using a credit card is abstract. But that’s exactly why I’m using cash only from now on. I’ve already saved just under $1,000, and I’m positive that I can save even more in the future using this spending hack!
- How much money do you think you need for expenses each week?
- Have you created a spending plan or budget for yourself? If not, why? If yes, was it helpful to you?
- Do you have a debit or credit card? Why or why not?
- Do you think you would save money by using cash rather than swiping a card? Why or why not?
- Do you use any other money-saving hacks?
