Do you desperately want to save but just can’t seem to manage it?
Then you’re in the right place. Whether it’s a holiday, a house, or future endeavors, this article is going to help you save money with both cash and debit cards.
Using Cash for Everyday Purchases | Advantages and Disadvantages
The main difference with using cash is that you can physically see the money that you are spending. Studies show that people spend up to 80% less when using cash over debit cards. So why is this?
| Firstly, being able to see exactly how much you’re spending can reduce how much you spend. It makes people more aware of how much money they’re handing over. As a result, they will consciously make an effort to limit it. |
| The second reason is that debit cards have fewer limitations than cash does. Generally, if you’re going to buy something expensive, you do it via card. Cash helps you buy things that are cheaper and more in proportion to your budget. More than half of all purchases made by cash in America are less than $10. |
On the downside, carrying money around is less secure than having money in your bank. If this is the method, make sure you’re careful not to lose it.
Using a Debit Card for Everyday Purchases | Advantages And Disadvantages
Debit cards are an easy way to pay for things quickly. Counter to the above, the issue with paying by card is that you cannot see the money you are spending, making it feel a little less real. Often, this can lead to spending more than you intended to and regretting it later.
| Nonetheless, using debit cards for payments is the most secure way to pay. Plus, even though you cannot see the payments you’re making at the time, it will be deducted from your bank immediately, which means it can’t go unnoticed and you have time to make up for any over-spending you may have done. |
| Using a debit card can prevent you from getting into debt, as even though the horizons are broader than when paying by cash, you do still have a limit, as you will not be able to buy more than you currently have in your bank. |
How can I save money using cash?
3 ideas for saving using cash.
Withdraw a Weekly Budget
Withdrawing only what you want to spend for that week means that you don’t have the option of overspending.
Once the money is gone, it’s gone. However, it’s also a good way of keeping you on track. For example, if you know you spent extra on one day, you can make sure you spend less the following day.
https://www.cnbc.com/select/cash-debit-or-credit-for-everyday-purchases/
Often, saving money is about separating what you want from what you need. This method helps you prioritize the essential things, from the things that can wait.
The Envelope System
The envelope system involves withdrawing all of the money that you need at the start of the month and putting it into different labeled envelopes. For example; rent, food shopping, social life, bills, car expenses.
For this to work properly, you’ll need to work out all of your finances and accurately calculate your payments. Keep in mind though, that surprises can happen. It is always useful to have a separate envelope in case of an emergency.
If this is not something that you can afford, then it’s okay to take money from other envelopes to help you get to the end of the month.
How Can I Save Money Using a Debit Card?
3 ideas for saving using a debit card.
Open a Separate Account
Something that many people find helpful when budgeting is to open up a separate bank account to use for everyday purchases.
With this method, you can transfer only the amount that you aim to spend, whether you do this weekly or monthly is up to you.
This helps people by monitoring if they are on target for their maximum spending allowance. Keeping bills separate is a helpful technique when it comes to saving.
Therefore, having your main bank account for bills and essentials, then the second one for luxuries and daily needs makes it clear how much you can spend.
Set Up Account Alerts
Some bank alerts are aimed at protecting privacy and data. Others are used for warning signs.
Some of the banking alerts you can set up to help you budget your money are ‘low balance alert’, ‘large ATM withdrawal alerts’, and ‘big purchase alert’.
If you’re very serious about saving, you can even set up an alert for every debit card purchase you make, although this option isn’t for everyone.
Conclusion
Whilst cash can limit the amount of overspending you do, it’s not suitable for every form of payment. It is possible to budget with either option. If you are overly susceptible to overspending, using cash for everyday needs will benefit you the most.
Budgeting with debit cards can be made simple and easy by setting up separate accounts and monitoring your finances on online banking, and often this is the best option for making larger payments, such as bills.
Image credit:[KAROLINA GRABOWSKA]