Best Method To Spend Money

credit cardOne of the most important aspects of personal finance is discovering the best way to spend your money. This is yet another one of those things that at first appears to be so simplistic that as you read this, you’re probably wondering why I’m even bothering to talk about it. You’re probably saying to yourself that most people don’t have a problem spending money, they have a problem saving it. Of course everyone knows how to spend it.

The truth is that the way you spend money will go a long way in determining how much you ultimately are able to save. Some people keep on their budget without a problem when they use cash, but completely blow it when using a credit card. Others can save more using credit cards due to the bonus rewards they receive (while of course always paying off the balance each month). Others prefer debit cards to both credit cards and cash.

There really isn’t a black and white answer to this area of what is the best way to spend. A lot depends on your own triggers and what method motivates you to spend the most responsibly. It is, however, essential that you take a hard look at how you spend using different methods (cash, credit card, debit card, check, etc) and figure out which method is best suited for you. If you spend using a method that is not conductive to helping you stay within your budget, you’ve set yourself up to fail even before you begin.

I’ve been thinking about this because I am trying to break myself of a habit that I developed in Japan. While I used credit cards for almost everything to get the rewards, I also carried around a lot of cash. Although credit cards are now widely accepted in most places in Japan, they certainly weren’t when I first went over there (I received my first monthly paycheck of $3000 in cash stuffed in an envelope – from the local government office for being a teacher). I also did a lot of antique shopping while there and many times only cash was accepted for these purchases. Therefore I would almost always have $500 in cash at a minimum when in Japan, and often much more (and this is why Japanese tourists are often targeted by thieves when on vacation).

Well, it isn’t the smartest thing to be walking around with $500+ in my wallet now that I’m back in the US and credit cards can be used for virtually any purchase, but surprisingly it has been a hard habit to break. I finally got the cash in my wallet to under $100 for the first time since I returned back to the US and hope to keep it there unless there is a specific reason to have more cash on hand. What do most people feel is a reasonable amount of cash to carry around on a daily basis in the US?

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9 Responses to Best Method To Spend Money

  1. edenz713 says:

    I think that it really depends on your lifestyle. I usually go to the ATM once a month and get about $60 – but then I almost never need to spend cash. But if you routinely need to spend cash – for parking, subway, etc. then you probably need more cash than I carry. I also find that for myself personally it’s almost impossible to spend cash – I just won’t do it unless absolutely necessary, and sometimes not even then.

    Do you have any good tips for traveling to Japan on a budget? My husband & I want to go their for our (slightly belated) honeymoon but we’ve heard that it’s very expensive.

  2. Poster says:

    I just got back from Japan myself and found the same thing. I didn’t use a credit card the entire time I was there (aside from the hotel I paid for state-side).

    I usually keep a spare $100 (minimum) in my wallet in the US for ‘backup’ for purchases and another $20 cab fare. I feel better with $200-300 in my wallet.. plus credit, debit, and checks.

  3. junger says:

    I’m completely the opposite. I rarely have any cash in my wallet, even in the situations where I need it.

    Most of the time it isn’t an issue, but if I find myself somewhere we I need it without an ATM, it can be a bit frustrating. My theory is that if I don’t have cash in my pocket, 1) I won’t make spur of the moment purchases like packs of gum, magazines, etc. and 2) Anything I purchase will be tracked and therefore I will remember to put it in my budget.

  4. Poster says:

    I don’t even include the amount of ‘spare cash’ in my wallet budget wise. Usually it sits there for months until the city declares a snow emergency or such. I keep it in the back and don’t think about touching for anything but borderline emergencies. I always keep receipts if I use it. I also like to have a spare $100 or more just in case a merchants checkout system is down or for some reason my credit cards get demagitized/don’t work/etc.

  5. With a billion CC options, plus my usual check card, I generally don’t have real cash, but I do have a ‘forgotten’ 20..cause 20 is enough for a cab, most of a tank of gas, a meal, and too big to break for a pack of gum. (heh also too big to hand over for the beggers)

    But then I spend way less in a month than you any ’emergency’ amount I would carry would be less.

  6. LuxLivingFrugalis says:

    I rarely keep over $10 in my wallet anymore! Why? Because I’ll spend that cash faster than you can say Boo-Boo Kitty! If I need to spend something then it needs to be in the budget and trackable!! My own rules for self preservation…he-he! I’m disinclined to write checks for items not in the typical budget when I know I’ll have to A. juggle it out of some other category and B. make all the entries 1-into the checkbook; 2-into the budgeting software and 3-balance it in the checkbook. This tends to help me stick to the ol’budgetoroni! There is something to be said for bookkeeping work – it helps me to limit the number of checks/cc purchases/debit card usages.

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  8. viper2127 says:

    I went to Alaska with a debit card and I didn’t have my register. This was one of the stupidest things I could have done. I ended up spending almost $700 in a week for stuff I didn’t need.

  9. Diana Dixon says:

    CASH??? what is cash? seems since the plastic money is more convenient that’s all my husband and i use..not credit debit card..we bank through USAA because my husband is in the army..when we do need cash and have to get out of the atm machine..our bank reimburses our fees in full so it makes it a win/win situation..we do have one credit card that my husband has and we don’t plan to use it except for when we get ready to relocate to ft. hood, texas in a few months..but we did agree that the card will be paid in full each month! it’s crazy because financial experts say get out of credit card debts and some say own credit cards or a credit card in order to help your credit score!!..go figure! good luck to everyone

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