3 FAQS ON ‘ALL-CASH’ DIETS

Isn’t an all-cash diet same as ‘envelop’ budgeting?

While a cash-only budget is typically paired with the envelope budgeting system, it needn’t be. With envelop budgeting, you have an envelope for each of the categories in your budget. You can only spend the money you have in those envelopes for the month. When you run out of money, you’re done.

However, while this largely short-term expense–focused budgeting style can be seen as a cash-only exercise, an all-cash diet also includes long-term cash budgets, which can have a time frame of years, apart from short-term cash budgets, which lasts only a few weeks to months.

What if I’m tempted to “borrow” from other expense categories?

This is why the cash-only budgeting system is likened to dieting, according to Raul. “No one can make you stick to a diet or a budget. It requires planning and self-discipline. You should learn quickly about your weaknesses in the budgeting process and adjust accordingly,” he said.

“The fix is to only make purchases when you have the cash in your hand from the right category. If you can’t stick to the allcash system, leave the rest of the cash (and your debit or credit cards) at home. Aim to not stray from your purchasing plans and the overall budget.”

What should I do when the money runs out?

Once the cash runs out for a specific category, you’re done spending in that category for the month. So you should review your receipts where you spent the money at the end of the month, if you’re falling short. Alternatively, you can keep a running ledger as you spend the money ahead of time.

“The first month or two may be tricky as you slowly perfect your budget. You may find you put too much in one category and not enough in another. You can always make adjustments as you see fit,” added Raul.

“At the end of each budgetary term, the ending balance of the cash budget – if you manage to accumulate one – is carried forward to the next term’s cash budget.”