How to Budget for and Track Cash Spending

Spending with cash is smart – you always know how much you have. But sooner or later, we all peer into the abyss of an empty wallet and ask: “Where did that $100 go?”

Spending with cash is smart – you always know how much you have. But sooner or later, we all peer into the abyss of an empty wallet and ask: “Where did that $100 go?”

Keeping your spending money in cold hard cash is the smartest and safest way to control your spending. But how do you track your cash spending?

Unlike when paying with a credit or debit card, there’s no paper trail to track cash spending. Spend with cash, and you can’t just load up your purchases into Quicken, MS Money, or your own budget spreadsheet at the end of the month.

If you want to allow yourself a general spending fund and aren’t really concerned where the money goes, then by all means, withdraw your cash allotment each a week and spend away. Unfortunately, this is an easy way to go broke before payday.

Savvier spenders will want to know how much cash can go to things like lunches, drinks, gifts, or entertainment.

Unfortunately, there’s no easy answer, but in my experience, there are two ways to track your cash spending.

Cash Spending Tracking Option A – Envelopes

The oldest form of budgeting, divide your cash into envelopes, or other pockets, for each kind of expense.

Only draw from the designated envelope to make purchases and at the end of the week deposit remaining funds from each envelope into a change jar for later depositing into your savings account.

Cash Spending Tracking Option B – Receipts and Notes

Making purchases over a few dollars with cash is rarely a problem because you can get and save the receipt for later reconciliation with your budget.

The problem arises because we often use cash for small purchases like coffee, bottles of water, or small food items where we aren’t automatically offered a receipt. Even if we were, collecting dozens of receipts for small purchases can be a pain.

The alternative is to keep a small piece of paper and a pen with you and just jot down each cash purchase. If you’re like me and you have a change jar at home, you can make a note that change from your small purchases has been added to your savings, too.

Published or updated on September 6, 2007

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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