Disclosure: I am a member of the Collective Bias Social Fabric community. I have been compensated to share my experience with you by Collective Bias and their client, Mastercard. My words and opinions are my own.
Have you heard of the cash envelope system? It’s touted by many as the way to stick to a budget, since you can only spend what you have in your hand. But it’s never worked for us. Or I guess I should say me, since I’m the one who does all the shopping: food, clothing, household, etc. The times I’ve tried to do the envelope system, I can’t make it work. I don’t like carrying all that money, especially since I don’t spend the same amount of money every week (I buy in bulk). What if I lose it or drop it? I’ve lost my coupon organizer many times over the years, which left me in tears, and that wasn’t even “real” money. And what if you’re just not trustworthy? Like yes, you’re an adult, but you can’t trust yourself with cash? That might be me, too. Cash just seems to disappear sometimes. Just saying.
So is there a way to Stick to a Budget Without Cash? Yes!
Using a Prepaid MasterCard is the answer for people like me who prefer to use plastic but need to stick to a “cash” budget. Here’s an example: our clothing budget (for all five of us) is $200/month, including shoes. It’s really hard to stick to that when there are good sales, or I get emails offering coupon codes and free shipping, or all three kids outgrow their shoes in the same month (!). With a Prepaid Card, I can load $200 to start, and that keeps me on track. I can use the card online (you can’t do that with a cash envelope), and it’s a lot more convenient than carrying an envelope around to stores. This way, I physically can’t spend more than what I have.
A Prepaid MasterCard can be safer than cash. You can register the card, and then if it gets lost or stolen, you can recover the money. It’s also a great option for people trying to repair their credit, since you don’t need a credit check or bank account to get one. Some proponents of the cash envelope system suggest using your debit card rather than cash; the problem with that is you can rack up overdraft charges plus be liable for loss and fraud, moreso than with a credit card or prepaid credit card.
I love the idea of letting my kids, when they’re older, shop on their own budget for clothing. With a teen, you can send them out with one of these Prepaid Cards–there’s no danger of them running it up, but they learn how to shop on a budget.
It is easy to get a Prepaid Card for use to stick to a budget without cash. This can work if you’re someone (like me!) who has trouble staying on budget while trying to achieve your financial goals.
Original image from TechnoHippyBiker at Flickr