How To Live Only on Cash: Should You Do It?

$5 bills cash
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Earlier in 2022, the hashtag #cashstuffing went viral on TikTok. The new trend, where one would divide up income into physical envelopes marked for different expense categories and stuff them with money, is a spin on an age-old financial concept known as envelope stuffing. Essentially, cash stuffing and envelope stuffing allow you to budget and plan for your finances without technology.

Over the last few years and amid the COVID-19 pandemic, many have questioned the role of cash in a world relying increasingly on digital currency. Is it possible to live only on cash? Should anyone try to make living cash only work for them?

How To Go Cash Only

If you wanted to live only on cash, you could do it. Making the switch from not using credit or debit cards would require employing certain strategies. Michael Collins, CFA and CEO of WinCap Financial, shares which strategies you’d need to ensure cash only success:

  • Using a budget. Having a budget is key when trying to live solely on cash. Collins said, “You need to be aware of your income and expenses to make sure you are not spending more than you are bringing in.” 
  • Tracking expenses. Collins recommends tracking expenses by using a budgeting app or Excel spreadsheet. This helps you see where your money is going and where you can cut back.
  • Using cash envelopes. Hey, it’s the cash stuffing trend! Designate a certain amount of cash for different categories of expenses. You may have an envelope for groceries, one for entertainment and one for bills. This allows you to stay on track with your spending and not overspend in any one area.
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As you prepare to go cash only, Collins said the most important thing to remember is being mindful of your spending habits. Using a budget and cash envelopes makes it less easy to overspend on a regular basis.

Financial Benefits of Being Cash Only

Once you have done the financial planning necessary to ensure you can go cash only, you may start to experience some financial benefits in this lifestyle. 

Michael Throckmorton, business success manager at Merchant Cash Advance, said in the long run going cash only means there is no longer any credit card debt or impulse purchases made using a debit card. Those who have credit card debt will find themselves creating better spending habits because they are sticking to cash.

“A cash-only lifestyle will set a limit for household expenditures and curb the unnecessary expenses which people often engage in when using cards,” Throckmorton said.

Aside from curbing unnecessary spending, you can use cash to better budget each month. In using a cash-only budget, Throckmorton said, the biggest benefit is you’re typically more motivated to stick to your budget as you start running out of money.

“Overall, a cash-only budgeting method is a great strategy to maintain your finances and keep track of exactly how much you have left,” Throckmorton said, “preventing impulse buying and contactless payments which become harder to manage.”

Downsides of a Cash Only Lifestyle

It’s not for everyone to live cash free. Some lifestyles simply cannot accommodate it, depending on your necessities. , While possible with cash, paying for utilities, electric and gas bills is also much more difficult without payment apps, credit or debit cards or a synced bank account.

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The other downside of leading a cash-only lifestyle is it can hurt your financial growth. The long run of being cash only means entering into no credit card debt. However, if you’re not using credit cards at all, there’s no opportunity to build your credit.

“Credit cards help build a credit history, which in turn helps you qualify to borrow money for large purchases,” said Danielle Miura, CFP and founder of Spark Financials

Further, cash-only consumers don’t receive other benefits associated with credit cards.

“A cash-only consumer may miss out on rewards programs and fraud protection,” Miura said. “Debit cards can provide these amenities, but it often has more risks being tied to your bank account.”

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