What is cash diet?
A cash diet is simply replacing your credit or debit card spending with cash. You pay cash for all of your daily expenses. The idea is that it makes you more conscious of your spending than if you use debit or credit cards.
When you are overspending, a cash diet could help you get control. This is the amount of money you can use for things like groceries, gas, food, entertainment and other day-to-day expenses during the month based on the budget that you already create. To make it easy, consider splitting up your monthly allotment into four envelopes, one for each week.
Even if you decide to stick to an all-cash diet indefinitely, there are some times to make exceptions and use credit cards. If you’re racking up travel rewards, frequent flyer miles, or cash back on a particular credit card, then you may still want to use that card for certain purchases. Some credit cards also offer additional benefits, such as free travel insurance and rental car insurance. If you need these services, then it’s better to use a credit card that offers them for free than to pay extra for them with cash.
An all-cash diet isn’t necessarily right for everyone. Consider just trying it for two to three months to see how much you can save.