Friday, July 27, 2012 1:10 PM

These days we are pretty much a cashless society – but it doesn’t mean you have to be that way!  Having access to all your funds in the form of a little plastic card is very compact and convenient but it takes real discipline to keep track of exactly how much is going out of your bank account.  It’s amazing how much those little transactions all add up and before you know it you could get a horrible surprise when you check your bank balance – or worse, declined at the checkout! 

If you want to avoid this scenario in future, the solution is simple.  Go back to the old fashioned days of dealing with cash.  It’s so easy, yet so effective and has been proven to save users thousands of dollars a year.  Much of the success of this method is due to the visual aspect – you can see how much money you actually have, as well as the psychological aspect – nobody wants to break into those nice, crisp notes.  I can definitely vouch for this; I’ve had a $50 note in my wallet for two weeks now and I just can’t bring myself to spend it!

Whatever the reasons, paying with cash works and is the easiest way to budget.  All you need are a few envelopes, or if you want to bring this age-old system into the 21st century, you can use plastic zip lock bags like my friend Linda!  I like using these too, as you can actually see the money inside so it just strengthens your resolve even more.  

How do I get started?  Easy!  Every pay day, sit down and work out how much money you are going to need for your usual monthly expenses.  Common categories include ‘Groceries’, ‘Petrol’, ‘Clothing’, ‘Public Transport’ and so on, whatever applies to you.  Once you have worked out your categories, allocate each one a zip lock bag and label it clearly.  Don’t forget to allocate a bag for spending money too!  Everyone needs a little luxury now and again and you can use this to get a haircut, a cappuccino, whatever you like – but you have to make it last the whole month.  When it’s gone, it’s gone!  Once you have withdrawn your cash and popped the required amounts into their respective bags, keep them in a safe place until required. Now the boundaries are set, you’ll be amazed how much you will save!