Monday, January 24, 2011

Cash Challenge

13 January 2011 by Saundra Davis

How much money is now in your pocket or bag? Go ahead, take a moment to check ... just go back to finish reading. In my classes I teach financial management is often the "envelope" as a method to set and stick to a budget. Of course there are several methods to set a budget-friendly, but we all know that the challenge is to stay within the limits of the amount of allocated budget. It is very easy to spend more than what we mean when we are spending "money" is a transaction with credit or debit card as opposed to cold, hard cash. In December I decided to spend a full week using only cash to an area of my budget. My thought was that I could see how much loss of expenditure I found and then decide what to do about them. I already had a budget so using cash would not be a problem, right? Well, as I learned quickly, that depends on the category of food and budget, has chosen.

Because it would rather do almost anything different from Cook, dining is an important factor in planning my meals weekly. My budget "food" includes dining out as food, so I have several restaurants serving good and healthy dishes at a reasonable price. Still, there is always room for improvement, when there are competing financial priorities so that this little adventure offered a perfect opportunity to trim that feed the budget a little longer to allocate the surplus of other things. The first couple of days were pretty; easy after all, I was flush with cash! How went the week which was to be a bit more selective about my choices. Decided that if I was going to do the last for the rest of the week would need to plan my meals for the remaining days rather than my usual method of waiting up to lunch or dinner and asking "hmmm, what I eat today?"

I quickly realized that "rigged" (intended) of the budget when it came to eat outside or snacking. I lived in my overall budget, so that wasn't really anything a minor change here or there to cover my food spending. By the end of the week that I had exactly $ 1.72 cents left in my budget envelope … this is food in comparison to my habit to go a little further every month. So, I learned a few things: 1) my food budget is a reflection of what I spend, and 2) I can easily cut the budget and redistribute a portion to another goal (I'm hoping to double my emergency fund this year).

Make money just adjustment was challenging and enlightening experience. I found myself paying more attention to whose voices were taxed on my shopping list and I was much more selective in my choices. I also found myself talking to small business owners on the impact of credit and debit card use has on their bottom line. According to the real cost of credit pizzeria local media site (not a big chain) pays $ 11,213 each year in fees of credit card processing, enough for a new delivery vehicle. And while the debt (using your PIN) cost less than their purchases, any savings in this economy helps them stay in business. This new awareness has given me a reason to use cash more often, especially at small businesses.

You may ask, "Where Saundra is going with this?" So let me get to the point, and Yes, even encouraged to increase your awareness of cash by selecting an area on your budget and using only cash to finance such expenditure. If you do not have a budget, start by deciding how much do you think there are currently spending or how much you want to spend on a particular line item budget and use that as the baseline. Day one, withdraw the amount you are entered in the budget and place it in an envelope and for the next 15 days (I'm starting a new category on 15th January) only spend the money in the envelope. Be sure to keep receipts in the same envelope, you can use them to decide whether and how you want to adjust expenditure at the end of the challenge.

If you let me know commenting on your category of expenditure in the comments below. I'll be checking back on January 30, to let you know how I did it with my new category ...YARN!

Saundra Davis
President & CEO
Sage financial solutions
San Francisco, CA

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