In April, we ran into a problem.
After the month was over, we analyzed our expenses and realized we spent $770 on food.
And we’re a two person, two dog household! Seems high, right?
Well with a little bit of effort in May, we spent 28.5% less on food. A full $220.
And here’s how we did it:
We went all cash.
And if you follow the easy steps (trust me, the “how to” and this post are not complicated at all) that we did, I’m sure you can save some extra money too.
How much money did you spend on food? Check it out.
Do you know how much money you spend on food each month?
No, not how much money you budget for food, but how much money you actually spend on food.
If not, head to your bank’s website and download last month’s transactions in an Excel file. Or you can use a budget app like Mint to automatically categorize your expenses (be sure to go through and make sure your expenses are accurately categorized if you use an app like that!).
Label each transaction and find where you spent money on food.
How does that compare to your budget? And does it seem like a lot or about right?
Well, when we had analyzed our April expenses and saw the $770 number we were certainly surprised. And it’s a sign that we needed to be more aware of what we were spending on food.
So what can you do?
Like I mentioned before, try to only use cash for food expenses.
Withdraw your budgeted cash for food in 2-week increments
At the beginning of the month, start by determining how much you are budgeting for food for the month.
For us, it was $500. That would have been a 35% decrease versus our April numbers.
We get paid in two-week increments, so at the beginning of the month, we withdrew $240 and made that last as long as possible with the idea that we would withdraw an additional $260 when we got paid next.
Grocery shopping? Out to dinner? A quick bite to eat or getting a snack out?
Pull money out of your cash pile for the purchase.
For us, this helped us tangibly see how much money we had left during each portion of our two week stretch.
If we hit our $240 (technically $250 to even things out, but you can only pull out $20 increments from the ATM obviously) then we knew we were done and had to make do with what we had in the house.
Luckily, we are in a position where if it came to it we still would have more money to spend on food, although I know not everyone is in this position.
Can this cash method be used for any expense?
Technically, you can use this cash method for any type of expense: food, entertainment, gas, etc.
Food is simply the easiest because of the frequency of those types of purchases.
It helps create a tangible idea about what you are actually spending. This will hopefully make you more aware of what you’re spending.
And essentially, this bucket that you’re creating will help keep expenses separate so you can more accurately gauge how much you are spending.
If you want to use it for gas or entertainment, more power to you! There won’t be as much of an opportunity for the method to save you money, but every little bit helps when you’re trying to cut down expenses.