e Cash Diet

Cosmopolitan (South Africa) - - MONEY -

Pay­ing strictly with cash money (no plas­tic!) most of the time is ideal for any­one who is rou­tinely sur­prised by the length of their credit-card state­ment, the echo in their empty bank ac­count or how of­ten they get dinged with over­draft fees. Of course, there will be some ex­cep­tions to the rule – like buy­ing a plane ticket – but be­yond that, do your best to use pa­per notes ex­clu­sively. Even one month of cash di­et­ing can give you a more re­li­able un­der­stand­ing of your main money leaks.

Step 1

Add up your monthly post-tax in­come. Sub­tract your fixed bills (rent, bond, util­i­ties, trans­porta­tion, cell­phone, loans) as well as any amount you put to­wards re­tire­ment and/or sav­ings.

Step 2

Use the left­over amount as your spend­ing money for the month. If this is your first cash diet, set aside a R1 000 buf­fer for sur­prise ex­penses such as an im­promptu doctor’s visit.

Step 3

Di­vide your stash by four to give your­self a smaller fixed amount of cash to use each week, and with­draw only that amount – se­ri­ously, only that much! – from the ATM.

Step 4

Track how fast you’re spend­ing. When you’re out of cash, no more spend­ing for that week – or month! If you have any money left over, roll it into your spend­ing for the next month.

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