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Complete Guide to Making the Switch to Cash

Making the switch to cash is my number one tip for people who feel like their budget is out of control. Here's my complete guide on how to make the switch and why you should do it in your next monthly budget!

Complete Guide to Making the Switch to Cash

One of the most beneficial and money-saving steps we have taken to change our financial future is switching to cash for portions of our budget. Before we made the switch, we NEVER used cash. And I mean like, never. I always swiped my debit card (or worse, my credit card) and went on about my day. It was was easier, for sure, but we had absolutely no control over how much we were spending because we never felt an ounce of it!

Why Switch to Cash?

Switching to cash has made us really stop and think about every purchase we make using those dolla dolla billz. Do we really need it? Could I be using this money somewhere else? Could I save it and use it towards our debt? Handing over a $20 and knowing that it is gone forever is painful.

When you pay for something with a card, you swipe the card, put the card back in your wallet and then take your goods and go. You never feel the actual pain of handing over cash, not getting anything back from the financial transaction, and then taking your goods. Paying with cash activates the pain centers in your brain that remind you that you've given up one thing for another. Using plastic, of any kind, never kicks that in to gear so you never feel it!

It also limits your spending and helps you keep control over categories that are easy to overspend in, like groceries, eating out, clothing, gas, and more.

What category would you love to have more control of your spending in?

If you designate an amount of cash for the month for a specific portion of your budget, once the cash is gone, you can't buy anything else in that category. That will, in turn, make you stop and evaluate every purchase you make and ensure that it is for something you really need or really want because you could be out of cash when something you really do want pops up.

It can also indirectly teach you delayed gratification. Using cash to save up for big purchases, like furniture or a car, can help you learn to wait for the things that you really want because you've decided to learn how to pay cash for them, instead of financing them.

How do you decide on the categories and amounts?

Choosing categories for your cash should look something like this:

1. Where do I tend to overspend most often?
2. Is this somewhere that I will be paying in person?
3. Can I carry a reasonable amount of cash and be covered for this category?

For example, a common place that people overspend is eating out. It is really easy to get carried away when the menus are all so enticing and the idea of no dishes completely takes over. I know - I've been there. Given that you have to actually visit an establishment to eat out, it makes it a great category to consider. Can you carry a reasonable amount of cash to a restaurant without feeling vulnerable? I don't know about you but usually I'm not eating somewhere that costs more than $100 so, I would say yes.

Next step to conquer is deciding how much. This can be very tricky when you've never used cash before because you don't want to go overboard, but you also don't want to cut yourself short for the month either. Here are some tips to help you decide!

Go back over your last thirty days of transactions on your bank statement and see how much you have spent in that category. Add that up and use that as your first guideline.

Set a goal for how much you'd like to spend in that category. You may find that you spent more than your rent on eating out last month (and oh yeah, that definitely happened to us), and maybe you want to trim that down a bit. It is possible you've spent less than you thought for any given category, but chances are you will be surprised at how much you spent. Consider setting a lower goal than you've spent in the last thirty days and challenge yourself.

Get rid of a category altogether! Maybe you didn't even realize you were spending $100/month on coffee at your favorite drive through (ahem, rhymes with JarLucks), but you'd rather put that $100 towards groceries and make your own lattes at home.

Add it all up and allocate it.

You've got your categories decided upon and your amounts set. It's now time to head to the bank. My drive through tellers know me as "the girl with the post it note" now because I always let them know how I want the bills broken down. Here is what a typical month of cash looks like for us:

Gas: $200, broken down in $20s
Groceries: $90/week (so the total varies), broken down in four $20s and one $10
Entertainment: $150 ($50 for me, $100 for Chris), broken down in six $20s and three $10s

Don't forget we are in baby step 2, and our budget is pretty bare bones. We don't eat out much or do much in the way of entertaining!

I go to the bank once a month and get all our cash out at the beginning. You may find that because of payment schedules or when your monthly bills are due, you may need to break it out in to two times a month, or even weekly. I just hate going to the bank, so I made our budget work! ;)

Get somewhere to keep it.

One of the excuses for not using cash that I hear most frequently is that people don't feel safe carrying that much cash around with them. I'm not going to disagree with this statement, but it is a pretty lame excuse if you ask me. I get all of our cash at the beginning of the month, divide it up in to the envelopes, and keep it in a locked cabinet in my desk. I only carry with me what I plan to use which keeps me from worrying about losing it all AND spending it all!

So if I'm going out for lunch, I grab some of my entertainment money to pay for it. If I'm headed to the grocery store, I only take that week's budgeted amount with me.

We use the basic envelope system from Dave Ramsey, which came with our FPU kit, but there are some nicer ones out there too if you want something a little more fancy. If you're super cheap, just use regular envelopes and write on the outside what each one is for.

If you're still skeptical of carrying cash with you, go to your pharmacy and get a prepaid card to load the cash on to. This just adds an extra step in but if it makes you feel more secure, then I say go for it. Remember though, plastic, no matter what kind, can enable overspending, so just beware!

Here comes the hardest part.

The hardest part of making the switch is sticking to the allocated amounts and not dipping from Peter to pay Paul (or using your debit card when you're out of cash). Not even going to lie - I really struggle with this. Some months I'll use my card at church to get Jett a donut when I am out of cash. Or grab lunch out when I'm starving and wasn't planning on getting it to begin with. This is really a lack of planning on my part and something I an constantly working to get better at, but I wanted to share it with you so you would know what to expect!

For the record, my husband hasn't used his debit card in like, a year. Which I am really proud of! He is awesome at it. I suck. :)

That is the benefit of using cash though - it teaches you discipline, planning, and delayed gratification. If these are concepts that you struggle with, you are NOT ALONE! We have been doing cash for over a year and I still struggle with it. We can drive that struggle bus together. But almost nothing else will give you the satisfaction of overcoming them than switching to a cash system for some of your expenses!

Okay people now let's get information

If you're ready to make this monumental change in your budget, and friend I think you are, then I've got a sweet little checklist for you to download here so you'll have all these steps written out for you and you won't have to come back here a zillion times to remember what to do. Why, you're welcome.

Download your free checklist here

Don't forget - if you're new to this whole budgeting thang, I've got a Free Webinar today at 2PM all about how and why you need to set up a cash flow plan. Even if you can't make it, go ahead and RSVP so you'll get access to the webinar replay after its over, along with the freebies that come with it!


  1. "Ok people now let's get information" // I see what you did there. And I love it.

    Great post! We're switching to cash soon and so this came at the perfect time. Looking forward to the webinar today!!

  2. Due to the huge number of lawsuits in the United States and elsewhere, there are a number of companies that exist to give cash advances on pending lawsuits..guarantor loans

  3. Articulately written and well figured out.
    Bitsane exchange


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