The way we manage our money has changed dramatically in the past few years, as new digital technologies bring greater security and convenience. Given recent health and safety concerns, cash transactions have been slowly phased out of our day-to-day financial habits. While the trend may be moving us toward a cashless economy, there are some instances when using cash just makes sense, like gift-giving, tipping, and door-to-door cookie fundraisers.
From a financial wellbeing point of view, using cash can be a smart strategy for reining in spending. There is something special about spending cash. It just feels different than using plastic or digital forms of payment. Some say that this is because spending cash is more painful as it disappears more quickly. It can certainly create a heightened awareness of exactly where your money is going. And awareness is a great first step to making behavior change.
Combining a cash budget with the envelope method can be a powerful strategy for keeping your discretionary spending in check. The practice of allocating a set amount of money into separate envelopes makes you more mindful of your spending goals. It also provides some useful guardrails for making smarter choices. When you feel compelled to accept an invitation that might wreck your budget, you can decline confidently saying, “Sorry, I can’t go out tonight because my entertainment envelope is empty!”
When withdrawing cash from your account, it pays to plan ahead. First, determine how much you need and how you intend to use the money. Having a plan will help you manage the cash more effectively. Then make sure you are not paying fees to access your own money. Trips to get cash at an ATM can add up with fees. To avoid fees + save try seeking an Allegacy ATM or ITM as an Allegacy member. Another option is to avoid using other Financial Institution ATMs, including Cash Points ATMs, as they may now charge non-members a fee. If you have a SmartRate Checking account, you can take advantage of the ATM fee refunds of up to $25 per cycle*. Another fee-free option is to request cash back when making a purchase using your debit card, like at the grocery store.
For additional budgeting strategies and tips for the whole family, explore the Budgeting for Families learning module on Your Financial Best.
*ATM fees will be refunded up to $25 per month, only if all SmartRate Checking eligibility requirements are met. Requirements include: eStatements, ten check card transactions and direct deposit (or ACH debit) per cycle.