Updated on 09.20.07

My Ongoing Battle With The Cash In My Pocket

Trent Hamm

One of the biggest psychological weaknesses I still carry with me, even after my financial turnaround, is the desire to spend the physical cash in my pocket. I have no problem keeping the credit cards in check, but if I have loose cash in my pocket that’s not perfectly accounted for, some little devil pops up on my shoulder and whispers all sorts of bad ideas in my ear. The next thing I know, the cash in my pocket vanishes and I suddenly only have something entirely unnecessary to show for it.

Here’s a great example. I had been tossing around the idea of picking up a game for my Wii for a long while, but usually when I toss around such things, they never come to fruition. Well, I loaned some money to a person a while back and that person repaid me – in cash.

Now, the smart part of my brain wanted me to do the sensible thing: take it to my bank immediately and put it in my checking account. And that’s ultimately what I did …. after stopping long enough to buy that unnecessary Wii game. I now have a new game to play, but my bad choice here basically caused money that should have been in my checking account instead disappearing into the ether.

This is a psychological hurdle that I’m constantly working to leap over. Here are some of the things I’ve done to help out.

Avoid the cash economy as much as possible. Sometimes you really need to use cash, though, like when I visit a farmer’s market. If I absolutely have to have cash on me, I get it at the last possible second and only get what I really believe I’ll need out of the cash machine.

Find something productive to spend it on if I must spend it. The last time I had cash in hand, I went to the grocery store and bought baking supplies – a second bread pan, a bunch of baker’s yeast, some dried fruit, a bunch of fresh vegetables, and so on. I burnt right through the cash, but it was stuff that I ate at home that was delicious.

Find other uses for the cash that separates it from me. I often like to change it into dollar coins, because I use these for money illustrations with my son and, because of that, I don’t view the dollar coins as free money to spend. Again, the key is to do this quickly after getting the cash.

The real long term healthy thing to do is to get over my mental block when it comes to cash, but for now, my financial situation is best preserved by avoiding cash when I can and using tricks to keep myself from spending it.

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  1. Mrs. Micah says:

    I can see the upsides of having cash, but psychologically it’s hard for me to do. They say it makes you take the money more seriously, but I find the opposite…that it’s easier to spend. Mr. Micah does just fine with cash, it seems.

    The biggest up and downside I’ve found is that on the way to work I pass a lot of homeless people asking for money. It’s easier that I don’t have anything to give, but sometimes I want to give. Once I went into the grocery and bought a gift card. But I still feel bad sometimes, like I should help somehow.

  2. Andrea says:

    It’s not so much that I spend cash more than I spend with debit, it’s just that I have a really hard time keeping track of it where it was spent so I always end up having to adjust my balances with “miscellaneous” to account for what I can’t remember.

    I’m actually trying a new system (since even with debit I find myself overspending on going out -it’s just to easy to forget how much you’ve already spent).

    I’m taking a specific amount in cash from each pay cheque, which is designated as “fun money”. I don’t have to keep track of where I spend it, but I cannot use debit at all for any entertainment or for dining out. If I have any cash left at the end of 2 weeks, I can either roll it over to add to the next amount of fun money, or (more likely) I will put it towards an extra payment on my credit card.

  3. Kevin says:

    I’m the same way. I’ve gotten better over the years but a year ago if I had money in my wallet, after the weekend it would have been gone. The way I have stopped myself from spending the cash on pointless things is that I aliquot the cash in my pocket for only recreational things (blow money). If I spend it all in a weekend then I am screwed for the entire month.

    When I first started working I carried only cash, but then I lost my wallet with my just recently cashed paycheck. After that incident I opened a checking account and have used a debit card since. I learned how to budget using my debit card. It always hurt to swipe my card and to see the money leave my checking account online. It was another thing to keep track of the # of 20s, 10s, 5s, and 1s that left my wallet. Also, since I used my debit card so much, the only time I would get cash if someone paid me back in cash or I found extra money. This meant free spending money, which took me a while to overcome.

  4. Bob says:

    Out of curiosity – what was the game you picked up? I figure it’s got to be good, if it tempted a frugal blog writer such as yourself to purchase it. We just picked up a Wii (been a Nintendo fan for a long time but put off purchasing the Wii until I finished grad school and started working) and have been playing Wii sports.

  5. tuck says:

    I dunno, Trent…sounds like you are being a little hard on yourself. You’ve been thinking about this for a long time — not an impulse buy — you already have the Wii, so it’s not like this purchase will incur other purchases on top of it, and I think you have earned the right to make a purchase ‘for you’ every now and then. (Though you’ve said that the Wii is also bonding for you and Mrs. Trent, so the purchase has other benefits as well.) Your larger point about cash in hand is a good one, but sometimes you do have to treat yourself well.

  6. Trent Hamm Trent says:

    Super Paper Mario was the game. My wife plays it, too.

  7. Dave says:

    I don’t get it… why would what’s in your pocket effect decision making?
    I would spend no less at the supermarket with cash than with credit… I simply get what I need (and price compare among similar items).
    BTW, I think we should have more Wii discussions :).

  8. Nate says:

    I’ve found we do much better with our budget and overspending when we converted from debit to all cash. We pull a certain amount of cash out of our bank account each pay period and divide it up into envelopes for things like, dining, home repair, car repair. Then when an item comes up we need to purchase we pull the cash out of the envelope, when the money’s gone no more purchases can be made until the next month when the envelope is refilled.

    Using this system we’ve been saved from many impulse purchases where we want the item and can afford it, but there isn’t enough money in the envelope (budget) to buy it that month. We’ll either have to save up and purchase at a later date, or realize we don’t really need the item.

    Best of luck on overcoming your fear of cash!

  9. Susy says:

    I’m the opposite. I get $50 out of the ATM and it takes me months to spend it (even after I give my husband $25). I always pay credit even though I have cash. The cash usually gets spent on tolls, newspapers, or maybe an ice cream cone.

  10. Red says:

    I too am trying to hold off on buying Super Paper Mario, despite the fact that it looks fantastic.

    I have promised myself that I will finish playing zelda before I buy another video game however, and I’m hoping to hold off until I get a week off at the end of the year, so that I have proper time to appreciate it 8).

    By the way, I would just like to thank Nintendo for making Wii points so annoyingly difficult to buy, otherwise I probably would have blown several hundred dollars on the virtual console. It’s only 5/8/10 dollars, right?!?!

  11. Elaine says:

    I avoid carrying cash as well for the same reason. It just tempts me to buy stuff… usually chocolate. For some reason, knowing that I have my debit card with access to X amount of dollars doesn’t really whisper to me “ooh, I could go for some cocoa camino now” but $3 jingling around does.

    If I have cash, I put it in a bowl on my nightstand. Then I’m not prone to spend it impulsively.

  12. Michelle says:

    I can’t hang on to cash either. Especially small bills, I dont realize I am spending $1 or $5 here and there until it is all gone. Bigger bills are a little easier for me, but eventually you will break them and have the small bills again. Credit and debit is just so much easier and you can track it.

  13. !wanda says:

    It’s curious. There was a poster yesterday that claimed that nearly no one had the discipline to use credit cards correctly. I’ve never had problems with frivolous credit card spending; instead, I have your problem- I get a bunch of “yuppie food stamps” from the ATM and suddenly in a week they’re gone.

  14. Matt says:

    Super Paper Mario is a great game for the Wii and for me was an excellent “investment” in fun. I have logged over 40 hours on the game over the last 5 months and still have quite a few hours to go I think. If both you and your wife a playing you should easily get your $/hour down below $1 on this game. Unfortunately the nature of a single player game doesn’t allow for much shared quality time unless one person likes watching the other person play.

  15. Kate says:

    I’m like Susy; cash lingers in my wallet for months. I use the credit card for absolutely everything I can use it for. We pay our balance off in full each month and get an annual “dividend” on what we spend. So it’s like getting a tiny discount everytime I use it. Not that I use that excuse to spend more.

    I get about $100 in cash every three months or so. I use it mostly to pay tolls, the occasional library fine, and at farmers’ markets too. Though at the CSA markets where I buy meat (in bulk typically), it’s usually going to cost me more cash than I have on hand, so I still dig out the checkbook for those occasions.

    Checks are sort of like hand-written letters to me: quaint and novel.

  16. Jessika says:

    I play a little game with cash when I have it, I got it from a message board on msn, whenever I get ones (and the occasional $5) i stash them away somewhere. Like when you get cash out (in $20s) and go buy something that costs $11, you get back a $5 and 4 $1s, go stick those $1s somewhere and eventually you’ll get a nice stash that you can use to do something or go somewhere (or buy the video game you’ve been thinking about!)

  17. smgirl says:

    I also think you are being too hard on yourself. My best advice would be to give yourself that freedom to spend some cash each week any way you like and not feel bad about it. My husband and I get allowances every week. We have a joint checking account and we each have seperate individual accounts. Every week when we get paid we take out money for our individual accounts. I take some of mine out of the atm in the form of cash every week. I use it for lattes, lunches out, movies with friends and even clothes or whatever i want. My husband does the same thing. We never feel guilty about it because we work hard to make that money and we are dilligent savers. If you can’t give yourself the pleasure of doing something spontaneaos and fun every now and then working all those hours seems too daunting. Of course we save money like crazy, we have 401k’s an emergency account and we are about to purchase a home.

    I think it is important to have fun money. Spend it anyway you like and let your spouse do the same. My husband spends most of his money on electronics, games and computer stuff but i don’t care. It makes him happy and he works hard. I would say, give yourself the option to spend money on silly things every now and then. Trust me you will feel better and you deserve it. Makes life much more fun.

  18. Laura says:

    Hmmm… I sort of have the same problem. I don’t feel compelled to spend cash that I carry on me, because I never use cash to pay for fun stuff anyway unless it’s something under $5 like a magazine. But I do tend to use cash only for things like Starbucks or lunches out. If I don’t have any cash on me, then rather than bother with going to the ATM to get any out, I usually just pack a lunch and bring it with me to work. If I have cash, I’ll often simply not bother to pack a lunch and I’ll buy lunch out with my cash. So I spend more on food when I have cash on me.

  19. Susan says:

    Ditto, don’t understand it fully but it is very frustrating.

  20. jtimberman says:

    Trent: Fanastic game, I’ve been playing it for awhile :-).

    I love cash. I really enjoy the process of buying something paying with cash, rather than with my debit card.

    I’ve found it much easier to control my spending with cash instead of debit. There’s two keys to this: using an envelope system and weighing each choice carefully.

    See, if I have a “entertainment” envelope and I put $50 in it for a particular two week pay period, I have to think carefully about how I’m going to pay for entertainment, and what kind of entertainment I might participate in during those two weeks. I can buy a Wii game, but then I can’t do anything else like go to the movies or the Zoo. If I go to the movies and the Zoo, I can’t buy a Wii game.

    It is absolutely, vitally important that all cash withdrawn for purchases in your budgetting system have a NAME (ie, envelope) so you know how it is supposed to be spent. That way you’re not buying Wii games from the gas money. It is also vitally important that every purchase be given at least some thought. Take the impulse out of your purchase decisions, and you will have power over your money.

    It’s taken me three years of work, but I’ve gotten really good at my spending habits. My friends have commented, and sometimes poked fun, and one of my new coworkers observed that I’m the most responsible person with money he’s ever met.

    And let me tell you, the compliments are rewarding. Even more rewarding, however, is knowing that when I see Metroid Prime 3 on the shelf, even though I have $50, I can make a decision “not today” and get on with my life, without letting the stuff I want take over.

  21. Sense says:

    I agree, the concept of those dollar coins are hard to accept as real money with high value–if I have a pocket full of change, I don’t go, “hmm, i have money, what could I spend it on?” My change goes directly to a jar to be counted and deposited at a bank later. If i had a pocket full of cash, however…you can bet I’d be dreaming of all the things I ‘need.’

    To prove my point, the dollar coins I received from random places (a toll booth?) are currently sitting in that coin jar. :)

    Now only if they made $20 coins, I’d be saving a fortune!

  22. Steve says:

    I don’t carry much cash, I generally pay for things with a rewards credit card that gets paid off every month. But I do keep a $50 bill tucked deep inside my wallet. Most of the time I forget it’s even there, since I never see it. Maybe you could try this. You never when you have to have cash for something (flat tire in the middle of nowhere, Armageddon, etc).

  23. viola says:

    I agree with jtimberman…..You can solve your cash problem by dividing it up in envelopes for whatever spending categories you have (food, fun, gas, etc) for each month/week/paycheck. When the cash is gone from the envelope, you stop spending.

    Trust me this is extremely effective, as you’ll find out when you spend the food money for the month in 2 weeks and have to improvise the rest of the month.

    This has made me EXTREMELY conscious of how much I spend and how much I have left. Credit card is too easy to swipe & go.

  24. Daniel says:

    My wife loves the cash budget. She definitely spends less when she withdraws a set amount for the month and has that for spending as opposed to just relying on her cards. I agree with a previous comment regarding debit cards. It is much easier to categorize your spending with debit card use & online banking, but we often end up spending more.

    For a 2 year period of my life when I was single I lived on a monthly cash budget of $135. The only expense I had, however, was food for myself. I knew that I could get by on $20 p/week at the grocery store so I withdrew $80 at the beginning of each month and labeled 4 envelopes for each week and placed $20 into each envelope where it remained out of site until needed. The balance grew in my account obviously. My point is that if you budget out your monthly expenses very precisely and set the cash aside somewhere that’s out of sight until needed, you’ll minimize the temptation to spend cash in your pocket. This works particularly well with grocery, household & entertainment expenses.

  25. Kell says:

    i have to agree that it’s very difficult not to spend physical cash, which is why I also avoid it. However, the trick I work with is if I have to use cash (often at my local markets), I take the remainder money and put it into a sealed money tin. It’s much easier than visiting a bank, so it’s more likely to happen, and I have a nice bonus amount of cash to cover me at christmas time.

  26. Anna says:

    I’m with jtimberman and viola on this. Until recently I put everything on my credit cards and “paid it off at the end of the month.” The reason I put that in quotes is that it never actually happened that way. Inevitably I would spend more than I could afford to pay off, and the balance kept going up.

    Now all my money is spent in one of three ways: bills and emergency fund savings are automatically deducted from my account, groceries and gas are paid for with actual cash that I take out of the ATM on the 1st and 15th of every month, and a little bit is transfered to a seperate savings account for irregular expenses like car registration and magazine subscriptions.

    If I’m actually purchasing something that I’ve set money aside for in that third account, I use my debit card and then subtract what I spend from the next month’s transfer. This way, I use the debit card so rarely that I really think about what I’m buying when I do use it, and I don’t use it to buy things that weren’t in my budget.

    Because I’m attacking my debt intensely right now, I don’t have any money that I can just blow on whatever. I may give myself an allowance for that stuff in the future, but right now I rely on the few fun things I’ve budgeted for and that I really use (netflix, crocheting, cable tv, etc) as well as stuff that’s free (hanging out with roommates/friends) and stuff I already have (a dvd collection and a computer).

    This has been working really well for me, so I’m sticking with it. It’s interesting to read the different philosophies of how people use cash/debit/credit. I think it goes to show how much psychology plays into finance and how personal it is.

  27. vh says:

    Wow! The differences in psychology are really interesting! And what great ways of “persuading” yourself to hang onto cash rather than letting it pour like sand through your fingers (exactly what it does whenever it gets into my hands)!

    Three reasons I prefer using a credit card:

    1. Cash sublimes into thin air for me. Or at least I have the impression that it disappears very, very fast. This may be because…

    2. Spending cash doesn’t leave me with a good record of where it’s spent. I think it’s a control issue…whether correctly or not, I’ve got myself convinced that I need to know exactly where every penny goes so as to understand my spending patterns and budget effectively.

    3. And finally, after you’ve had your purse stolen or your house burgled, you get radically averse to carrying cash or keeping it anywhere inside your home. If your credit card is taken, you can cut your losses to $50 or less. But when some s.h. takes $100 or more, it’s just gone. I can’t afford to lose fifty bucks, much less an entire week’s worth of grocery money!

  28. Lori says:

    I’m actually the other way. As I get out of debt, withdrawing a set amount for groceries, gas and incidentals each week has been one of the best ways to stick to not spending more than I earn.

  29. Anna says:

    I’m so completely fascinated by the differences in how people think about this issue. It’s really interesting to read how other people handle this.

    Logically, I understand that using a credit card lets you look at exactly how much of your money went where at the end of the month. This is exactly the reason I always used credit cards in the past. The problem for me was that I would look at it, see that I spent too much and what I spent it on, vow to spend less, and then never follow through. When I use cash, it’s gone when it’s gone, end of story.

    Luckily I’ve never had my purse stolen. I can see how that would make someone *extremely* adverse to carrying cash.

  30. Patrick says:

    I also think it is fascinating how people function differently when it comes to spending money. You don’t like to carry cash, while other people get into trouble with plastic.

    I find it comfortable to always have around $60 cash on me at all times. Sometimes a little more, other times a little less. But I use my credit card for every purchase I can, and pay it off at the end of the month. I just like having the cash for the feeling of security.

  31. Bob says:

    Electronic envelopes. I don’t keep physical cash in my home. I did have someone break in and steal quite a bit which was to be paid for bills. I lost that money forever, the police detective said “Sorry that is how it goes”. I did have receipts and proof of my cash, didn’t matter. They eventually caught the person who broke into my home but I never got my money back.
    Now I use only credit card for all purchases. I have an “Electronic Envelope system” so I name each bill or expense and put that amount to be paid. It seems to be working out quite well, I gain that extra interest from my online bank. I also gain rewards from my credit card which I always pay off each month. I refuse to keep physical cash in my home.

  32. Romeo says:

    I was going to exclaim, “what!?, you’re not wasting cash if you are buying something that you value AND can afford it after all your other savings obligations are met.” But, then I saw that this article was written in 2007, so hopefully you wouldn’t feel as guilty today.


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