CASH: THE KEY TO YOUR SPENDING ACCOUNTABILITY
Many of you may know that we are massive advocates for cash and for not ‘setting-and-forgetting’ your household budget. Having cash as part of your budget strategy is key to accountability of your spending and allows you to have greater foresight on how and why you choose to spend your money.
Cash unlike cards gets broken down in denominations when you spend money whereas cards don’t, and this can often lead to our brains not having the perception of reduced funds available. As an example when you make a digital payment on card or (heaven forbid) tap your phone, you have no visual clue how much you just spent or what your remaining balances are because your card and phone are still the same size. They haven’t had a chunk taken out of their phone or card like cash does.
It’s much harder for the brain to hand over a fifty dollar note knowing that that fifty dollar note is gone and you walk away with denominations from your purchase. If you hand over a fifty dollar note for a forty five dollar purchase you will experience the reduction of your cash denominations with a result leaving you with a measly five dollars. The effect on our brains is that we recognise we no longer have fifty dollars available and that our available funds have reduced – significantly. Having the perception of your money decreasing in real-time can present a ‘pause-point’ in our spending determining if we actually need the item we think we want, or do we want to hold onto our money more.
One of our clients that we have been working with for about 18 months now has moved from triumph to turmoil and back again. Win’s early on had led to defeat following job loss, then back to success with a new role (that they love) combined with overtime benefits boosting their nett income position and having a significant boost for their budget surplus.
For such a long time the managing the household budget had been a struggle. Constant overthinking with ADHD had meant that money set aside for longer-term goals was often eroded for ‘in-the-moment-spending,’ that later led to frustration with a budget that just didn’t seem to work.
Month after month we saw the same results – digital spending, tapping the card, overspending each month and zero build-up of back-up savings.
At each meeting we dropped the seed… ‘have you tried a cash strategy for your weekly spending?’ At each meeting it was blocked. ‘Cash is so hard.’ ‘I have to go to the ATM each week to withdraw it and I just keep forgetting to do it.’ ‘Digital is easier…’
A month ago we had come to a head with our accountability meeting delivering some very hard truths, and a breakthrough happened. Our client had decided to give cash spending a go for ‘one month only’ and report back.
The result?
They were SO ANNOYED that cash just worked so well for them.
Their savings had doubled, their back-up buffer for long-term bills and other related expenses had soared, and the loose change in their cash kitty was abundant. Not only that, they had made the decision to keep using cash going forward to replicate the results we have encouraged to date.
We are so proud of what our client had done because they could not see what we could see – how a simple tweak of process could have such a profound change on their spending, their savings position and their mindset.
It can be confronting to learn that we don’t know everything, and that to move forward in life different strategies are required for different times. So many of us keep living the same life day-in, day-out with the same mindset, the same thought patterns and the same behaviour expecting different experiences to occur. But the key is that what we wish to experience in our lives all begins with our thoughts and ‘what you think about, you bring about.’
If you want to change where you are at start with the inner work because nothing changes until we change.
And when we change – everything changes.
What has been holding you back from achieving your financial goals?
