The Pro’s and Con’s of Cash Budgeting

Hey friends! Welcome back to today’s blog. I hope you enjoyed the budgeting article from last week. Today, we’re going to explore the pro’s and con’s of cash budgeting. Really, we’ll do a comparison between cash budgeting and non-cash budgeting (using a debit or credit card for your spending).

As I have already discussed, budgeting can be hard. It’s hard to face some difficult facts about your spending and it can be hard to decide where to put your money. The good thing about budgeting is it means your money has direction. You have somewhere important for it to go, whether that’s debt payoff, bills, necessities, a vacation or a nice item you have been wanting to buy for a long time.

If you have already decided to set up a budget, or maybe you already have been budgeting, the next question is what method works best for you? I have personally tried cash and non-cash budgeting and I do actually like both for different reasons. I honestly first tried it when I purchased my first copy of the Budget by Paycheque Workbook by Kumiko Love, otherwise known as The Budget Mom on Youtube. There is a spread in the workbook that promotes cash budgeting with cash envelopes, and I really wanted to try it.

I’m currently using a credit card for my daily spending, and I will go into why in the pros and cons list below:

CASH BUDGETING:

PROS:

• Easier to keep your money

  (harder to part with physical cash)

• Easy to keep track on paper

• Fun to fill out the cash breakdown on budget forms

• Satisfying to have physical cash

CONS:

• Pain to get from the bank

• Can only track if you get a receipt

• Inconvenient when paying at some locations

  (i.e. Fastlanes which don’t accept cash)

• Harder to pay with during pandemic

• You could lose cash easier, no way to

  get it back

NON-CASH BUDGETING:

PROS:

• Convenient to tap your card

• Can collect cash-back or other rewards

• Transactions can be found on your online

  bank statement, so if you forget the receipt

  it’s not a big deal

• More secure (passwords/pin on cards)

• Using a debit card offers all benefit of using

  cash, without the hassle and is not as dangerous

  as using a credit card (if it’s hard for you)

CONS:

• Can be easy to get carried away with a

  credit card

• Easier to spend = more transactions =

  might forget to record expenses

I am personally using a credit card for my spending because I really appreciate the cash back rewards. It is super convenient to simply tap my card, and if I forget a receipt (which is all the time), I can easily go to my phone and check the transaction there. I do struggle with the ease of spending on a card which is probably why we have balances on our credit cards again after paying them off a few times.

If you can think of any other pros or cons that I missed, please let me know in the comments. I hope you enjoyed reading this article and I will see you again next week!

Cheers!

SAN