If you’re like most Canadians, the holidays hurt your bank account. But, shifting to the cash system in 2019 will save you big bucks.
Set up pre-authorizations and stop automatic credit-card charges for fixed expenses: Make a list of fixed expenses (ones that don’t typically change) that you incur throughout the course of a month. This should include rent, utilities, transit passes, child care, gym memberships, and more. If these items are currently being charged on your credit card, move the charges over to your bank account through pre-authorized debits (PADs).
Tap or pay with physical cash for variable expenses: Variable expenses are things such as groceries, books, prescriptions, haircuts, clothing, birthday gifts, trips, coffees, lunches, and more. Tap or pay cash for these. These costs have the potential to blow up if you’re not careful. Set limits on your spending, use coupons, find deals, downsize your latte to a small vs. a large, DIY your nails or make your lunch. You can control this category. If you make a list of upcoming variable expenses over the next few months, you can spread them out.
Pay using debit online: When we tell people about the cash system, they inevitably present the counter argument that online shopping is where the best deals can be found, so therefore they need to leave one credit card unfrozen. Untrue. There is a workaround. Most major retailers will allow you to pay with PayPal (which will debit your bank account), or they’ll allow you to purchase gift cards using PayPal, and then those gift cards can be used to pay for goods at the online store. If you find that annoying, good. That’s partly the point. Online shopping has made it too easy for us to spend. So, clear those filters on your computer where your credit card numbers are saved. You’ll need to find another way to pay.
Carrying credit card balances? Make your regular payments: While you’re on the cash system, you’ll still be making regular payments toward the balance on your credit cards. But, unlike previous months, you’ll actually be making progress. You may even find that you’re able to pay the balances off faster because you’ve freed up money by cutting back on unnecessary spending.