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Your Money

Understand Your Finances

Sticking to cash helped jump-start this couple's savings plan

This is part of Savings Diaries, an original series in which people share how they try to reach key savings goals during 2018. It is part of a broader Chase initiative to encourage more Americans to save money.

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I'm not the most organized person. I lose my keys multiple times a week. My husband finds my debit card in our laundry basket (after I've left it in my back pocket) more frequently than I care to admit. And he isn't much more organized himself.

Lack of organization may be the biggest challenge my husband and I face when we're trying to reach our financial goals, and specifically our savings goals. We often make pledges to spend less, to keep better track of cash coming in and going out, only to get caught up in life and lose track of receipts or forget to write things down.

Of course, disorganization isn't the only budget problem we face. We need to be more disciplined about saying no to unplanned expenses. We need to practice frugality when it comes to required expenses, like kids' clothes and groceries. Still, even these struggles seem to come back to our messy approach to our finances. It's difficult to make changes to your spending if you're not clear on what you're spending in the first place.

A plan for the new year

When you're a family of five, unexpected expenses are around every corner. Someone needs new shoes or we have to make a trip to urgent care. And, because we struggle to keep good records of our spending, I could easily see us getting to the end of each month without so much as a penny in our travel fund. That's why we decided that getting control of our variable spending had to be our first step towards saving more.

I knew that keeping track of a ton of receipts and balancing a checkbook several times a week would overwhelm me. My husband and I decided to switch to a cash-based system. We'd go to the ATM just once a week, and take out all the cash we needed to cover that week's expenses. That would save us the headache of constantly tracking our spending.

Deciding on a number

The first step was to figure out how much cash to withdraw each week.

Our longtime habit has been to pay our fixed bills like the mortgage each month, then spend whatever is left over, on anything from groceries to clothes to trips to the coffee shop.

Because of this, we weren't super confident about how much cash we needed to last us a week. Withdrawing too much would prevent us from reaching our savings goals. At the same time, we didn't want to get too strict with the budget. History has taught us that we need a little wiggle room for fun or we just end up spending money on unplanned purchases.

We knew Chris needed enough for gas, and I needed to pay for groceries. But Chris also didn't want to give up having a couple lunches out with his work friends. We decided he would pack his lunch three days a week and grab lunch with his friends the other two. That, combined with gas, meant he needed $60 per week in cash. I wanted to buy coffee out twice a week, and take my kids to our local bakery on Wednesday afternoons. Those fun expenses plus groceries added up to $250 a week. We decided to hold off on budgeting for clothes for the kids since they have everything they need until the weather warms up (or someone hits a growth spurt).

Putting it into practice

Using only cash has one big benefit: it's simple. We added a trip to the ATM into our weekly grocery shopping routine and got used to reaching for paper bills instead of debit cards. We also found that what we budgeted for each week was a really comfortable amount. The fact that we budgeted in the splurges that are most important to us made it easy to cut back in other areas.

The only hiccup was unplanned expenses—not emergencies, just things we forgot to put into the budget. Chris needed a haircut. We had a date night already on the calendar. Those expenses added up, but didn't stop us from being able to transfer $500 into our travel fund account.

The month in review

Saving for our travel fund felt like a no-brainer this month, and I felt victorious checking it off our January goals

I think we can commit to a cash-based system. I like the simplicity and it is an effective way to avoid overspending. Mary Sauer, Freelancer Writer

I think we can commit to a cash-based system for the long term. I like the simplicity and it is an effective way to avoid overspending.

Looking ahead to next month, however, we know we have some challenges on the horizon. We have some unusual expenses, specifically a trip for work that I have to pay for out of pocket since I am self-employed. There is also the chance that I will lose some of my income in February. This could become a huge problem if I can't find a replacement client before then. I'm glad for a victory this month, which is motivating me to stay positive and think creatively about the challenges ahead. 

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