Did your goals for a no-spend January or no-spend February go bust? Maybe you’d like the kinder, gentler alternative to a month-long spending freeze — a “cash-only” week.
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“It would need some real momentum to become successful,” said Thomas Rudzewick, President and CEO of Maspeth Federal Savings. “But I think it’s incredibly important.”
Jamie Wall, personal finance expert at Gamblizard, suggested the concept of a cash-only week to get a jumpstart on saving for a summer vacation or other planned expenses: “Here’s how it works: Withdraw a set amount each week and challenge yourself to stay within this amount with all your expenses.”
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The Challenge of Cash-Only Spending
For today’s consumers, the first step may require a difficult mindset shift. “The challenge is people actually taking cash and putting it in their pockets,” Rudzewick said. He noted that he’s not surprised by a recent study reported by NPR that people spend 9.4% more, on average, on their credit cards after adopting a mobile payment method.
It’s called “frictionless payment” for a reason. “You tap Apple Pay and before you know it, you’ve overspent,” Wall said.
It seems counterintuitive, Rudzewick said, but a little bit of friction when it comes to spending money is a good thing. “The value of that physical dollar in your pocket is tangible,” he explained.
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Online Shopping: ‘A Black Hole of Impulse Buys’
Cash-only weeks also eliminate online shopping, which Wall called “a black hole of impulse buys.”
Using online transactions only for automated and necessary bill pay can provide a tremendous boost to your budget. “A couple of cash-only weeks in the upcoming months, and you’ll witness unnecessary spending decline,” Wall said. “You watch your money disappear, and that shift alone changes how you spend.”
Rudzewick agreed, noting “There’s a psychological effect that comes into play when people have physical cash in their pocket they’re relying on. There’s a finite amount of money you can spend because you’re only making a finite amount of money.”
He advised taking whatever cash you have left at the end of the week and depositing it into a high-yield savings account so it can grow. “Seeing that cash gives you more ability to control what you’re going to save,” he said.
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Sources
Thomas Rudzewick (LinkedIn), Maspeth Federal Savings
Jamie Wall, Gamblizard
NPR, “Using your phone to pay is convenient, but it can also mean you spend more“
This article originally appeared on GOBankingRates.com: Try This Secret Money Tactic Experts Say Can Save Money Every Week
