Cash Allowance

I just read a post over at GetRichSlowly about “adult allowance”. The idea is simple. At the beginning of the month you take out a cash allowance from your ATM and keep that money with you. This money is then used to buy “wants”. “Wants” are things you want but don’t necessarily need. By having a limited allowance you force yourself to be conscious of every buying decision. Do you really need what you want? Probably not and by having a limited budget, you may find yourself passing up on things you normally would have bought.

Currently, I use a debit card for almost everything I purchase. I find the use of the debit card allows me to easily keep track of where my money is going. I then import all of those transactions into YNAB so I can get a visiual representation of exactly what categories my money is going into.

The problem with using the ATM card though is the ease of use. When I want something, I simply reach for my debit card without much thought. I think if there was a cash allowance in my pocket instead, I probably wouldn’t be so quick to purchase these wants.

I am going to do a test starting next month. After figuring out my budget, I am going to set up an allowance amount. I will then withdraw that cash at the first of the month and try to make it through the month purchasing wants only with that cash. No debit card! In order to make sure I stick with the plan, I may even travel without the debit card during the times I am not specifically out shopping for a “need”. I will keep one credit card on me as usual in case of an emergency, but the rest will be dealt with in cash.