Why I’ll Never Use a Cash Only Budget

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Many like the cash only budget though I hate it. Here's why I think credit cards can be a great tool to your budget and help better manage your money.

While I’m moving this week, please enjoy this contribution from Kara at Frugal to Free. 

I’m Kara and I have a personal finance confession: I love credit cards.

In the personal finance world, credit cards can be a polarizing topic. Some people call them the devil, and swear by their cash only budgets. Some people wax poetic about credit cards, and swear by their usefulness.

I’m in the second camp. I’ll never use a cash only budget.

Don’t get me wrong- I see what the naysayers are talking about. Most people mindlessly swipe their credit cards. You can end up with a huge pile of debt in no time with that kind of mindset. With cash only budgets, you can see your money disappearing before your eyes. You know exactly how much you have to spend and when you get to that point, there is literally no more money.

It’s a good system if you have a problem controlling your spending. If you don’t have that problem though, credit cards can offer a world of options.

For someone like me, who has a small income, credit cards are a necessity if I want to do things like travel or give baller presents. I make under $35,000 a year so frugal living is a necessity. No matter how frugal I am (and I’m pretty damn frugal) I can only make that stretch so far. Often things like international travel are out of my reach.

However, with offers from credit card companies that give me thousands of bonus points for meeting spending minimums in certain time frames, those things are back on the table.

How I’m Flying to the East Coast for Free This Year


You’re telling me you’re going to give me points for thing’s I’m going to buy anyway? So that I can eventually get free things? On top of that, you’re going to aid in my getting free things with bonuses and extra rewards for buying certain things? Cash back when I buy groceries, which I need to live? Double points on gas for my car, which I rely on? Sign me up for that!

Recently I spent $3,000 in three months for a 50,000 rewards points offer. It was definitely more money than I usually spend in that time frame, since I can’t charge my big expenses like rent to the card. I’m frugal to the bone, and $3,000 in ‘extra’ spending seemed impossible at first.

However, meeting this large minimum was the kick in the pants I needed to get several car repairs done. They were way overdue. I was procrastinating on them because I didn’t want to spend the money. I also updated my seriously lacking professional wardrobe, and charged shared expenses that I was reimbursed for.

I took on all this spending knowing that I had enough to cover the costs, and knowing that I was going to use the points this calendar year. I’ll be flying to the east coast in May and August for free thanks to the points I accrued! By the way, if you’re looking for a credit card with a similar reward offer, check out some options here and start earning your own free travel.

How to Use Credit Cards Wisely


Only open one card. Don’t fall for every single offer that comes your way. Open one card and learn how to manage that before you move on to multiple cards.

If you have multiple cards, only keep one in your wallet at a time. Focus on growing points with that one card and make sure you’re paying it off each month.

Limit spending to necessities. If you can pay rent with a credit card, go for it! If not, put things like gas, groceries and repairs on the card. Do NOT use it for shopping, drinks or dinner out or last minute impulse buys. Thinking of the card as your ‘food card’ will help reign in any over the top spending.

I think credit cards are a great way to rack up rewards that add to your life. I personally use my points exclusively for travel, but you can buy gifts with them, or even deduct from your amount owed with them. With such great bonuses attached to them, I feel it’s a missed opportunity to go with a cash only budget.


What are your thoughts on a cash only budget? 


Kara Perez works at a nonprofit during the day and stalks personal finance blogs at night. She blogs about debt payoff and frugal adventures at

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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