Family cuts up credit cards and spends 24% less in a month

Filed under: Work Life

There are a lot of reasons today that families are pinching pennies. Maybe your household has been hit by unemployment, or maybe you've just become a stay-at-home parent. Maybe gas prices or high heating costs are hitting you where it hurts, or maybe it's all of the above. At kindergarten pick-up the other day, the mom next to me sighed out loud and said to no one in particular, "My husband needs to find a job. NOW."

Whether you're struggling financially or not, it's always a good idea to take a hard look at your budget and extra spending. After all, those dollars that mysteriously float out of your wallet every day could be put toward savings, retirement, or a college fund. One technique many financial experts recommend is going to the cash-only system. By eliminating credit and debit cards, it's easy to see how much cold, hard cash you have to spend.

ABC News has a story about a family who did just that for 30 days and reduced their spending by 24%. They cut up all of their credit cards except for one, and froze that one in a glass of water in the freezer for emergencies only, then depended only on cash in their wallet for the things they needed. In the end, they saved more than $1800.

A friend of mine uses a cash-only technique that she calls "Food, Fuel, and Fun." She withdraws enough cash each pay period for those three categories ("fun" is anything that is not food or fuel) and once the money is gone, it's gone. She says that seeing her money go in such a visual manner has really helped her reign in her spending.

What kinds of methods do you use to keep your family's finances on track?

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Start by teaching him that it is safe to do so.