By Taylor J. Kovar, CEO – Kovar Capital

–Hi Taylor – Any advice for spending and tracking cash the way I’m able to with money in my bank account? Any time I have money in my wallet I feel like it gets spent super fast, and I have yet to find a method to control myself. – Elizabeth

–Hey Elizabeth – It’s funny how people’s efforts to spend less on credit cards leads to more flippant spending of paper money. I hope someone will do a study someday to figure out what it is in our brains that causes this kind of financial disconnect. Until then, I do have a few thoughts that I hope help you out. Just remember that in the end, it’s up to you to commit to better spending.

  1. Treat cash as savings. Cash often feels like it has no specific purpose. With money in your checking account, you know you need sufficient funds to pay rent; with a credit card, you know when the balance is getting too high and interest payments are escalating. When you have $40 in your wallet and you’re at the store, that’s just money to be spent. You have to force yourself to see that cash differently, and one way is to think of it as money that must be saved. Anytime you pay for something a friend pays you back in cash, you have converted spending into saving. If you find five dollars on the ground, your savings account owns that money. Put it in a drawer or safe or wherever you please, and then do the deposits directly to savings at the end of the month. No ifs, ands, or buts.
  2. Buy specific things with cash. It’s always useful to have cash. You can avoid using your credit card, skip using ATM’s and split bills more readily with friends. Unfortunately, convenience isn’t always smart. You can conveniently go into a cash-only store and spend $20 on things you don’t need. If you make a rule – cash can only go toward coffees, for example – you’ll spend less carelessly. You might also stop yourself from making casual purchases you’d otherwise put on credit. No bills in your wallet? Guess you’ll have to drink the so-so coffee in the break-room at work.
  3. Save for something big. As long as you don’t carry too much debt and your earnings are good, you can start putting cash into a box or a drawer and working toward a goal. The urge to spend cash on things you don’t really need will go down when you decide to put the money toward something you really want. Save up for a new couch, an expensive cleaning service or a fancy dinner. You’ll feel much better if you put that cash to good use.

It’s easy to spend frivolously, but it’s just as easy to correct the problem with a little focus. Set a goal, stick to it, and you’ll turn this problem around. Good luck, Elizabeth!