How to Live on Cash for a Year
Living on cash only can be tempting, especially if you are seeking to rid yourself of debt and spend only what you have. The fees and annual percentage rates on many credit cards and loans can be high, and can bury you further in debt with interest payments that may be tough to make if you are strapped for cash. Using only cash on hand can ensure that you live within your means.
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Instructions
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Set up a personal budget. Record all your upcoming expenses, along with miscellaneous spending, in a financial journal or digital spreadsheet. Your columns should include the amount you plan to have at the start of each month, and your expenses, which may include rent or mortgage payments, groceries, utility bills and car payments. Subtract these monthly expenses from your monthly cash allotment. Any leftover portion of cash could carry over to your next month, be put into a savings account, or be used to cover emergency expenses that occur during the month. Keeping a budget will give you a better idea of your overall cash situation.
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Plan ahead for purchases. These purchases can vary in size from a certain amount of groceries you'll need for a party to larger purchases such as cars, computers or a home remodel. Anticipating upcoming purchases will give you a better chance of obtaining what you want since you'll be planning ahead.
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Save as much cash as you can after you pay your bills and make your purchases. Sudden emergencies can occur that may be expensive, and if you aren't prepared to cover unanticipated costs, you may be forced to borrow money from friends, family or the bank. Put your monthly savings into a "rainy day" account that you can access in case of emergency.
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Sign up for online banking. Part of the battle with living on cash is being organized enough to know where it all goes and how it is being spent. Check your online bank statements at least once a week, and cross-reference these statements with your personal budget to make sure you haven't forgotten to record any purchases or paid bills.
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Automate payments. By automating at least some of your payments, such as car bills, utility bills, cable television bills and monthly health insurance payments, you can avoid incurring any fees or penalties in case you forget to make a payment.
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Differentiate your needs from your wants. Depending on your lifestyle, needs may include basic clothing, laundry money and toiletries such as toothpaste, soap and shampoo. Wants may include plasma televisions, new cars and high-end fashion items. Needs should take priority in terms of your cash spending, as they are more necessary in your day-today life.
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References
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