cash machine imageYou just can’t figure out where all your money’s gone. You know you just went to the cash machine the other day and you didn’t go anywhere special, but suddenly you’re back at the cash machine again today.  Cash is ALWAYS a huge area for what I call financial seepage.  Cash seems to seep out of your pocket and you don’t know where you spent it.

Close the hole! Stop the financial seepage, by controlling your use of cash. Nowadays, you don’t need cash for many things. First, figure out where the cash is going:

1.     Look at your last month’s bank statement and add up all the cash withdrawals (ATM stops)
2.     Take a regular week (not vacation or business trip) and watch what you use your cash for.
3.     Write down or dictate into your phone exactly what you use your cash for.

Take a look at what you’re using cash for.  You should use your credit card for things that you want to keep a record of so you can understand your spending like gas, dinners/drinks out, airline/train tickets. If you’re spending cash on those things, try to use a credit card that is paid off each month. Let me repeat: use a credit card you pay off each month. This is not a license to charge more and have more debt.

Let’s do some math and here’s an example:

  • Last month’s total cash use = $800
  • Regular week cash use = $217
  • Regular week multiplied by four (approx wks in a month) is $217* 4= $868
  • $868 is less than 10% higher or lower than $800 = pretty steady 

If #3 is about equal (give or take 10%) to #1, then your cash use is pretty steady, if it’s not then you probably had a one-time big expense that week or month

If you want to use less cash and go to the bank machine less often, be consistent.  Take the amount of cash you used last month (if it was a regular month with no one-time items) and take that amount of cash out of the bank on the first of the next month.

If you can’t take that big of a lump sum out in one day, Take your monthly cash use number and divide by 4. Commit to going to the ATM one time per week on the same day each week for one month. Pick a day that’s easy, where your schedule doesn’t change much and go the ATM and take out your regular month’s cash use divided by 4.

Example: regular month’s cash use = $800, take out $800/4 = $200 every Monday afternoon

Don’t go to the cash machine no matter what and see if you can get by. See what happens when you start to get down to $20. Can you just avoid the extra cup of coffee, beer or magazine? Don’t charge extra items (except those listed above) instead of using cash, try to keep yourself to your $200/week.

If you can’t seem to stick to your weekly cash draw, Go back to #2 above and do that for several weeks to see what you’re spending on. Chances are when you see it on paper and realize you don’t need to buy it, you can learn to stop yourself.