Frugal Friday: Pay With Cash?

Ever since I started working with a budget (basically my whole life!) I've heard that it is best to pay with cold hard cash. For someone who writes checks and usually uses my debit card, it's a hard rule to follow. And I wonder, is it is a rule that must be followed?

Maybe for those who are just starting with a budget and have no idea where their money is going, that could be the way to start. It is recommended to sit down and figure out how much you will need monthly for groceries, gas, and fun money and withdraw the cash each payday and stick it in envelopes that are labeled and only use that money for what it is intended for. Once that envelopes are empty, no more groceries, eating out, or fun stuff until the next payday. Okay, I can see how that works. You know where your money is going and how much left you have to spend that week.

I've never done it that way. I have sat down and created a budget. I know how much I have to budget for the electric, gas, phone, insurance, and city bill. I know how much I need to budget for the mortgage. I try to always aim for $100 or under at the store, so know how much to allot for groceries. I typically know how much we spend in a month and when to stop spending. But my husband and I rarely carry cash with us. It is so convenient to whip out the debit card (which automatically comes out of checking) or write a check if it is local. I balance the checkbook with the receipts and online banking info every few days and can see how we are doing that way.

Quite honestly, I get confused when I use the cash system. I've tried it, I really have, and I always screw it up. For example, last week I tried it again...I took $100 cash out for groceries and went shopping at Super Target. But we didn't just pick up groceries, we picked up some cookware and odds and ends. So when it came to pay and it was $55, I payed it with cash. But then I thought, do I subtract the $12.56 that I paid for other items and put that amount back into my grocery budget? Where do I get the $12.56 even, since I have no other cash on me, especially not in that exact amount. Do I need to run to the bank and withdraw $12.56 to stick back into the grocery envelope? It's confusing! My way would have been to log the $55 into my checkbook and realized I spent $12.56 on "other items" and $42.44 on groceries...giving me $57.56 left for groceries for the week. THAT logic is much easier for me to grasp.

I realize that the cash system will never work for me, unless I only use it for certain things such as the "fun category" or the gas budget (though I love using my debit card at the gas pump instead of having to take the kids out of the car seats and run into the gas station to pay cash). I also don't like having a lot of cash on me. I'm a bit careless with my purse and leave it lying in carts and sometimes in the car and I just don't want a huge chunk of cash with me.

I do just fine by keeping track in my head and by looking through my checkbook to see if we are keeping on track with the budget each week. I find it a much easier system for myself than trying to deal with different envelopes of cash. I think we need to find a system that works for ourselves and then stick to it. As long as we know how much we are spending each week and staying within our guidelines I don't think a cash only rule is the only one which can be used.

Are you a cash only, check, or debit card person? What works the best for you?

P.S. While my grocery budget is currently $100 weekly, I do hope to cut that down to $75 or less. I know once my garden is producing that will help. Shall I give myself a $75 grocery challenge for this coming week? I think I will try just that and check in here with updates!