Cash Only Living | The Smartest Way To Grow Your Wealth


Are your finances in order?

Are you living a debt free life?

The reality is most of us are not.

We have no clue where our money is going or if we are getting ahead or not.

Add in mountains of debt we have and it is no wonder why personal finance is so hard.

And if you want to try to get your finances in order, good luck.

You have to track your spending on your credit cards, debit cards and account for any cash you spend.

And don’t forget about ATM withdraws. Where did that money go?

Because getting control of your finances is so hard, it is no wonder why people give up before they start.

But I have a simple solution for you.

If you adopt it, it will make personal finance a breeze.

And you will get ahead financially.

It is called cash only living.

When you pay cash for everything, you simplify your finances and you take control.

The result is improved finances over time.

In this post, I am going to walk you through how to get started with a cash only lifestyle.

I will also show you how cash only living will improve your finances faster than you thought possible.

Cash Only Living | Your Ultimate Guide

How To Get Started With Cash Only Living

cash only living

Going on a cash only diet sounds scary at first.

You have a lot of bills and to be honest, swiping a card makes life so much easier.

But you pay for this convenience.

And the price is bad financial habits and wasting money.

But once you get started with paying cash for everything, you will find it is not hard and there is freedom with it.

So how do you get started?

The easiest way is the cash envelope system.

To start, you need to sit down and figure out your spending.

You need to know how much you spend and categorize it.

Then you need to total up each category so you know how much cash you need to pay those expenses.

For expenses that are due only once or twice a year, make note of them for later.

Once you have the amount you spend in each category, you need to think about your pay cycle and how much money you need every week to cover your spending.

For me, I like to work in 2 week batches.

This helps to limit the number of trips to the bank.

I break out my spending in each category into a weekly budget. Then I take 2 weeks worth of cash to cover these expenses.

When you begin to spend your cash, it is important that you track your spending so you know where your money is going.

This can be as simple as writing a note on the envelope, with the date, place and the amount.

For expenses you pay once or twice a year, you open a savings account for them.

Then save the monthly amount and you will have the cash when the bill comes.

For example, I pay my home insurance once a year.

It is $1,200. I save $100 a month so when the bill comes, I have the cash to pay for it.

In fact, I have 15 savings accounts.

Not only do I have them for less frequent bills, but also for savings.

For example, I have an account for Christmas gifts.

I don’t worry about how to afford Christmas or going into debt because I have the money saved.

In this regard, I recommend CIT Bank.

Their savings account is easy to use and pays one of the highest interest rates, meaning my savings grows every month.

Click the link below to open your free account.

CIT Bank Button

The last tip for getting started with cash only living is large purchases.

While I am all for saving money until you have the cash, in some cases, this is easier said than done.

For example, you need a new couch.

You could save, but if the one you want is being discontinued, you need to act.

This is where layaway comes into play.

Many stores offer layaway as a free way to finance your purchase.

Here is how it works.

You put a down payment on an item, and then every week or so, you go back in and pay a little more on your item.

When the item is paid in full, you take the item home.

You choose how much you pay every time and there is no interest charged to you.

As you work your way through cash only living, you will have to make changes along the way.

This is to be expected and will make things easier for you as the months go by.

If you find switching over to all cash at once is too much, then pick a few budget categories to start.

Then only pay cash for these purchases.

Once that becomes comfortable, begin to add a new category the next month.

In time you will get to a cash only lifestyle.

Benefits Of Cash Only Living

Benefits Of Paying With Cash

I mentioned some of the benefits of a cash diet for the things you buy.

Here is a detailed look at the many ways paying with cash only will improve your finances and your life.

#1. Controlled Spending

When you buy things with a credit card, you can easily get yourself into credit card debt by spending more than you have.

Take it from me, as I have personal experience with this.

I am sure you have also opened up a credit card statement and thought, “wow, I spent that much?!”

When you don’t see the cash leaving your pocket, it is easy to spend more than you have.

This is because spending money is psychological.

If you only have $10 in your wallet, you are going to be more selective when spending that money.

But when you have a plastic credit card to swipe, there is no emotional tie to your money.

You can swipe all day and never think about the money you are spending. You just focus on the good feeling of buying things.

#2. Smarter Spending

Related to the point above is better spending habits.

You will think more about every purchase you make and what you need versus what can wait.

This will help you to stop spending on wants you don’t need.

For example, if you have $10 and you need milk, paper towels, and potato chips, what will you buy?

You will realize that potato chips are not needed right now and will skip buying them.

You might even consider not buying paper towels as well and instead use a rag to clean up messes.

#3. Avoid Impulse Purchases

We’ve all been there.

Out shopping and something catches our eye.

We don’t think about the money we will spend, just the item we want.

As a result, we waste a lot of money on useless things.

By paying in cash, you significantly reduce the chance of an impulse buy because you see you only have a certain amount of money.

Over time, this helps you to improve your financial situation.

#4. Avoid Debt

Paying cash for everything will also help you to avoid debt.

And this is a good thing considering US consumer debt statistics.

When you don’t have a credit card for purchases, it will be easier to avoid financial trouble.

And by not having debt, you cut a huge stress out of life.

Imagine for a minute what it would be like to not have any credit card payments to make.

#5. Easier Budgeting

When you use all cash, it is much easier to set up and follow a budget.

You can use the cash envelopes, where you place cash in various envelopes, each with its own purpose.

When the envelope is empty, you can’t spend any more money in that budget category.

Or you could use a modified version of this system.

If you overspend in one category, you can take money from another category that has a surplus of cash in it.

This will cover your overspending.

But it shouldn’t be done on a regular basis.

The easiest budgeting solution is to use cash only and track your budget yourself.

This doesn’t mean you need to follow a manual budget on a spreadsheet.

You can use programs to budget.

But using cash as your payment method will make any budget you pick easier to follow.

#6. More Savings

When you go on a cash only diet, you will most likely end up with change.

While some readers may dislike change, I actually enjoy it.

I take my change and place it in a jar.

At the end of the year, I head over to the bank, count it up, and get cash.

I usually average around $500 each year. I then take that money and invest it or throw it into a savings account.

Doing this helps me to reach my financial goals.

Also, by paying cash for everything, you will be more selective on the things buy, as I mentioned above.

In time, you will find that you spend less money than you did before, and the result will be a bigger bank balance.

You can then take this surplus and invest it every month.

#7. Reduced Chance Of Identity Theft

When you pay with credit cards, you run the risk of having your identity stolen.

But if you only pay with cash, you reduce the odds of this happening.

This isn’t to say you eliminate the risk, but you greatly reduce it.


Drawbacks Of Cash Only Living

DrawbacksOf Paying With Cash

Of course there are some downsides to living on a cash only diet.

Here are the biggest drawbacks and some simple solutions.

#1. Online Shopping

Making online purchases is going to be difficult as you cannot pay with cash.

A solution could be using your debit card.

While it is not cash, the money will come out of your checking account immediately.

All that is left for you to do is record the spending in your budget system.

Another option is PayPal.

If you connect your checking account to PayPal, you can pay online merchants with this option.

Again, just make sure you record the spending.

Finally, you could opt for a pre-paid debit card.

Here you load the card up with a set amount of money.

All that is left for you to do is record the spending.

#2. Losing It

If you lose your money, you are out of luck as it cannot be replaced.

Because of this, when you go on a cash diet, you need to plan ahead and only take the amount of cash you need.

Nothing good will come from carrying a lot of cash with you everywhere you go.

Plan ahead and carry just enough cash that you will need.

#3. Credit Score

Using and paying off your credit cards helps to improve your credit score in time.

The same holds true with taking out different types of loans and paying them back.

By adopting a cash only lifestyle, you no longer need credit, which can have an impact on your credit score.

Though, not using credit cards won’t negatively impact your credit.

What will have an impact is if your creditor closes your account due to inactivity.

Most creditors will mail you letter telling you your account will be closed.

To keep it open, you need to make one purchase.

#4. Credit Card Rewards

A lot of people use credit cards for the cash back and rewards they offer.

A handful of people even use the rewards to travel for free.

While only using real money to pay for things has you miss out on this benefit, you need to keep things in perspective.

Will you really benefit that much from paying with plastic?

Are you the type that overspends?

For most people reading this, you are better off using cash to pay for things and accept that you miss out on this benefit of using credit cards.

Frequently Asked Questions

Frequently Asked Questions

Here are most common questions I get asked about a cash only lifestyle.

Do I have to go all in with cash only living?

Ideally you will want to switch over to cash only living because of the many benefits.

But there is nothing wrong with just trying it out.

For example, you can choose a month to not use any credit cards and pay with cash only.

Even in as little as 30 days you will see how simple it is to overspend when using credit cards.

And you will see how much more you think about purchases before you make them when paying in cash.

Will I spend less paying cash for everything?


When you see you only have a certain amount of money, you are going to think through your purchases a lot more.

The result of this will be reducing your spending on many things you do not need.

Also, you will get a better sense of what you value.

You will begin to choose to spend money on these things and not on many of the things you currently buy.

How do I make reservations using only cash?

Many people believe you need a credit card to make a reservation for a hotel room, airline or car rentals.

The truth is you can use your debit card to make a reservation.

This will allow you to make travel arraignments and not worry about getting into debt.

The only downside is many hotels will place a hold on the funds until your stay is complete.

But you will have enough money in your account to cover this expense, so it should not be an issue.

Is cash only living hard?

Using only cash is hard at first.

There are many reasons for this.

First, you have to think about your spending and how much money you need for each expense.

Then there are the trips to the bank to get the money out.

Overall, switching to a cash only diet will be tough at first.

But change anything in your life and it will be hard in the beginning.

We are creatures of habit, so any change is uncomfortable for us.

If you stick with it though, you will see the benefits and the hard parts will become easy.

Wrapping Up

I have found cash only living to be the best lifestyle that allows you to live within your means.

While this does bring its own share of challenges, it makes you get creative in problem solving.

Remember, there are always options and ways to solve financial challenges, without using credit cards.

After all, credit cards have not always been around and families managed just fine for a long time without them.

I am certain if you give a cash only lifestyle a try, you will be better off in the end.

3 thoughts on “Cash Only Living | The Smartest Way To Grow Your Wealth”

  1. This is fascinating Carrie! Whilst I’m a long way from cash-only living I do try to take money, say £100, from the bank at a time and use that for all purchases eg food, fares, clothes etc, rather than putting these items on a card. That way, I’m far more conscious of what I’m spending, and potentially frittering away. Seeing an empty wallet is very sobering! Great to hear how it’s working for you.

  2. Oh yes, an empty wallet is very sobering LOL! I do think paying for things in cash almost always keeps one more conscious as it brings more emotion that we tie to cash, where a plastic card is more abstract and not near as “real” I think it is great you take cash from the bank for purchases!

  3. After I got myself into some debt after college, I went to a cash only lifestyle. Once I paid off my debt and was still using only cash, I slowly switched back to credit cards to get the rewards. I slowly went back in, and make it a point that whenever I made a purchase on my credit card, I would transfer the cash from my checking account to an account for my credit card. That way, I would always have the money to pay off the credit card.

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