Personal Budget Planning

One concept I’ve been working with is creating a hybrid system to handle cash and a debit card.  It seems if I simply just spend money off my card, and get cash when I need it, I end up in either two places.  I’m either out of money in my living account or I’m out of cash. 

What I’ve worked out is a cash allowance.  Each week I allow myself $60 cash as part of my living expense.  The rest stays in the account, coming out on the debit card.  This allows me to consistently have cash if the need arrises, but still have money to make online purchases.

Running out of cash too soon was a problem I encountered when first enacting this system.  It’s often more convenient to whip out a $20 when paying for something, but this route quickly leads to no more cash.  Cash is rarely required, but when it is, it’s a very demanding necessity.  Having none made me wish I had paid for my tea with my debit card.

I fixed this by looking at cash as a scarce resource.  I am much more likely to be in a scenario that only takes cash than one that only takes credit.  Therefor, cash should only be spent when needed.  So I started use my debit card as much as I can.

If I reach the end of the week, and it’s time for my next cash allowance, I can easily spend it.  Or, better yet, I can save it.

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