A few years ago when I first opened a checking account, I got all excited about the little plastic bit that came with it and virtually stopped carrying cash. I used my debit card for nearly everything. Initially this worked, but after a few months I realized that I was loosing track of how much money I had, and I had no clue where it was all going. This should be recognized fairly quickly as not a solid foundation on which a teenager can build her financial future, so clearly, something had to give, or using plastic was going to break me.

Credit and debit cards are so convenient that we learn to love them quickly, but they have a shady side. They create a buffer between us and our money allowing us to spend without thinking. Sometimes it requires the feel of cash slipping out of our fingers to keep us on budget. That’s how it works for me anyway.

So, to aid my plan for when, where, and on what I spend my money, I’ve devised a system for how I spend it. Everyday expenses are paid for with cash, most bills and all charitable donations are paid with checks, and gifts and some school expenses still go on the card.

Everyday expenses are mostly gas and food, but also include soap, clothes, non-class-required books, writing supplies, scantrons, and so on. For these items I count out my dollars and hand them to the cashier. Actually handling the money makes me think things through a little better in these areas. For these expenses, I give myself a weekly allotment, and don’t allow myself near the atm again until the week is up. Personally, I find budgeting further for specific expenses doesn’t really work as I don’t always need the same thing, so I try to fill my gas tank early in the week, and then drive carefully; buy food as I need it, some weeks I’ll eat at home for all meals from supplies purchased on a previous weeks budget and spend nothing in this area, other weeks are so crazy I eat out for 8 meals and end up with hardly enough for a payphone call at the end; and wait until toward the end of the week to buy books and new clothes if I need/want them and have the money available.

Bills and charitable donations are an easily defined category. The amounts for gifts and everyday expenses are determined based on what’s expected to be left after these are paid. I like to write a check for these so that I have my own record. Also, on the charitable donations, it is better for me if I have to write out the number on the line and repeat it in the corner. Softy that I am, if I gave away cash, I might just pass it out by the handful and starve the rest of the week.

Gifts and school expenses I still pay for with my debit card. These are budgeted for overall, but don’t fit handily into my weekly budget. I try to shop early for Christmas and birthdays, and you never know when a good deal will show up. So if I know that I have planned to spend get something worth about X dollars for someone’s Christmas gift and I find the perfect gift for 75% off, I buy it on my card without worrying about the three lonely dollars hanging out in my wallet because the money is set aside in my accounts. School expenses mostly go on the card because I’m not really comfortable carrying 600 dollars cash into ridiculously crowded bookstores right before school starts.

Basically what I have done is selected the method most likely to cause me to hesitate before overspending in a particular area and only pay for things that way. For me that is mostly cash. However, I know someone who only buys groceries with a check, because then she will have to defend the number to her husband. Look at your own spending habits and figure out what will work best for you.

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This article is submitted by the Muse from Musings Chocolate and Tea. She will be contributing regularly on this site.

Posted: 08|29|08 at 6:31 am. Filed under: Money Saving Tips.
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