While credit cards can be extremely useful in establishing a healthy credit history, they can also encourage excess, unhealthy spending habits, if used irresponsibly.
The benefit of using credit cards, of course, is that they are much more accessible, which can result in overspending when you don’t physically see the money being spent until the following month when the statement comes in the mail.
If you feel like your spending is getting out of control, try cutting back with the 30-day cash challenge.
How it works: While you can continue to pay certain, fixed bills with a credit or auto-withdrawal from your bank account, the 30-day challenge is designed to use cash exclusively for daily purchases within the 30-days.
Using cash exclusively for 30 days can:
Discourage overspending. Rather than mindlessly swiping your credit card for unnecessary expenses, using cash encourages you to prioritize your finances by level of importance and urgency.
- Encourage financial responsibility. Using cash will promote consistent budgeting and careful spending habits.
To begin the 30-day cash challenge, you must first create a budget for how much cash you think you will need throughout the next several weeks. To do so, think in terms of everyday expenses, such as eating lunch out vs packing a lunch.
Tip: consider dividing cash into separate envelopes, labeled for each budgeted expense i.e. groceries, gas, entertainment, etc. This will help monitor and identify your spending.
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