It is Time to go on a Cash Diet

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cash diet

No, I am not going on the traditional diet.  I have also not found the magic pill.  This is a budget diet!  Overspending is just like overeating.  When you do it in excess, you feel terrible and you have regret.  At least, that is how I feel.  They both work the same way with aftereffects as well.

When you overeat, you gain weight and your health suffers.  When you overspend, you get into debt and your financial health suffers.  Both are bad and both sometimes require diets to get back into shape.  After a month of my indulgences getting the best of me, I am going on a cash diet!

What is a Cash Diet?


You won’t see this one on too many infomercials or any for that matter.  Cash diets are not the next big thing, but they do wonders for your budget.  When you are overspending, a cash diet could help you get control.  A cash diet is simply replacing your credit or debit card spending with cash.  You take your budget and pull out money in cash to handle a spending category.  While I tend to not go all-cash for paying bills and such, I do like the idea of using cash for my “entertainment” category.

If my “entertainment” budget is $100 per month, then I would have to pull out $100 at the beginning of the month.  I am supposed to spend the cash wisely over the course of the month.  Once you spend all of the cash, then you are done for the month.  If you blow it all in one day, then you are done.  You can’t go back to the ATM and pull out more cash.  The cash diet keeps you honest with your spending.  You know exactly how much you have and there is no fighting math.

Why Go on a Cash Diet?


Cash diets are actually pretty well known in the personal finance community. Many people use them for everything they purchase.  I don’t typically buy anything with cash as I don’t like carrying it around.  The problem with credit/debit cards is you can spend more than you have.  This can cause more debt and pesky fees when you overdraft your bank account.

No one likes that. So, for the sake of staying away from debt, I am embarking on a cash diet.

I have decided to pull out cash for my entertainment and food budget categories.  All of the other categories deal with static bills and gas.  I tend to overspend on entertainment and food categories when I am going through a stressful time. Excess food gets purchased and little things are bought here and there.  $5 purchases over and over again can lead up to quite a bit.

Cash diets are great at fending off the overspend.  While you might think you are giving yourself an allowance, just think of how this can help your spending.  It is impossible to spend more cash than you have in your wallet.  If there is no way to get more cash, then spending more is not possible.  Stores and restaurants don’t tend to barter.

*Related: New to writing checks? Check out our guide on how to write a check for step-by-step directions.*

You probably hear many top personal finance people talking about all-cash diets.  The age of plastic is upon us and the paper is not used as much in traditional spending.  As I have said, I don’t use cash much.  I am not sure how this happened, but over the years I have had less and less cash on hand.  This is going to change now.  While it is not a new year’s resolution, it is a resolution all the same.

I am going on a cash diet until I can get my food spending under control.  This is going to be the best way to curb my urges to spend money on fast food.  While I do need to address the underlying cause of my food addiction, this is at least a proactive measure.  By the way, my underlying problem is stress.  I will get back to a point of working productively and efficiently and the stress will disappear.  As the stress disappears, so does my urge to eat fast food.  Now, onto the ATM to pull out my cash for this month.


Have you thought about going on a cash diet?  If you have, how did it go? What in life tends to trigger an overspending episode for you? What spending areas would be good candidates for a cash diet for you?


Photo courtesy: Tax Credits

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Grayson is the owner of Debt Roundup and Empowered Shopper. He also co-owns Sprout Wealth and Eyes on the Dollar. After going to battle and winning against consumer debt, he decided it was time to learn how to use credit wisely and grow his wealth. He discusses all things personal finance and is not afraid of being controversial. He also is a freelance writer and blog manager.

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  • I really need to. The spending has been too high the last few months over here!

  • I went on a cash diet too after a period of over indulging. It happens from time to time. The key is to not let it spiral out of control and keep things in check. Going all cash is a great way to do this.

  • I have never done a cash diet before, but I think it’s a great idea. You literally cannot go overboard when you have an envelope of cash to spend. It’s an entirely different experience.

  • I suppose that’s one way to get spending under control. There’s really no way to spend more than you budget if you have it in cash in an envelope…unless you go to the ATM! But I can only imagine how defeating that would feel.

  • Kim says:

    I’ve done that for personal spending. It’s those little $2 and $5 purchases that add up and kick your butt if you aren’t careful. I’m sure McDonald’s will be disappointed, but I think that’s a great way to control what you spend.

  • I haven’t done a cash diet before, but I only use my debit card, so I can’t spend more than I have. For me, this works! I imagine I may spend my money somewhat differently if I actually used cash, but not significantly. And I really like that my debit card tracks the exact amount I’ve spend, so I can fill in the actual spending on my budget.

  • I frequently go on cash diets and I make clients go on them as well. I lost 50 pounds on weight watchers and I attribute most of it to the fact that I knew how many points I had in a day and I didn’t want to go over those because I knew I would lose weight if I stayed within my point allowance. I think cash diets work the same way. You typically need them when you are not mindful about your spending and then once you know what the number is, it’s amazing how much you change your lifestyle and your choices when you can’t go over your daily or weekly limit.

  • We use cash only for all clothing. Each member in our family gets a spending envelope for clothes with cash placed in it every month. When a need arises, the money is or isn’t there depending on what that person needs. Sometime we have to wait until the next payday when the envelopes get replenished. We don’t buy any clothes without taking money from those envelopes. In many cases this has kept us from buying on the spur of the moment because we didn’t have the envelopes with us.

  • We’re perpetually on a “Cash Diet.” I like having the physical reminder of NO money in my wallet to make me stop spending. 🙂

  • I think cash diets are great, especially when your spending needs some taming, which happens to all of us. Like you said, it forces us to not overspend and often times weigh our choices more carefully. Sliding our cards is very automatic and easy. We don’t stop and think – we just do it. I honestly tend to put most purchases on my CC out of convenience because it doesn’t make comfortable carrying around a lot of cash either.

  • I’ve considered it for my eating out category but just this past weekend I went to a fast food restaurant and ordered through the drive thru. I paid cash with a $20 bill and the kid did not return my full change which was $9. I was distracted when I went, talking with my husband. I guess since I’m not used to paying with cash I completely did not notice until the next day when I was looking for my change. I was so upset and the receipt had already been thrown out. It was my fault for not paying attention but if I had paid with a credit card at least I could dispute the charge.

  • I wouldn’t do a cash diet simply because it’s easier to track my expenses for tax purposes when I use cards, whether that be debit or credit. I am planning on putting a stop to opening credit cards for points though. I’m just planning on using the two main ones I have to build up points for next years travels. It can get out of hand and I have a hard time keeping track of when the annual fees kick in, etc. Some people are good at the game. I’m OK at it, but don’t feel like mastering it right now because my spending can easily get out of hand.

  • Hey Grayson, believe it or not, I’m on a cash diet right now. It’s going very well. We decided to go on a cash diet when we realized we weren’t saving enough for our wedding. Since we’ve started a little under a month ago, we’ve put an extra almost $900 into the wedding fund!

  • Great idea to use cash for your entertainment budget. I used to be all cash simply because I grew up in countries where plastic wasn’t common (at the time). Now I like using plastic for the rewards, but deep down I’m always going to prefer cash. I always have at least a little cash on hand (usually $20 – $30) because plenty of places in New York are cash only or have minimums for credit cards.

  • Michelle says:

    Having an envelope with cash sounds like a good idea. I have never done this but I need to! I’m usually not good with just cash, but if I have an envelope and I am forced to not use more than that – that could work on me definitely.

  • I believe strongly in a cash diet. The less I use my debit card, the more my savings increases. Using only cash really helps me stick to my budget. It is a great idea for everyone to try. It teaches self-control and restraint!

  • Lauren says:

    I haven’t really carried cash in years, with the exception of the odd $20 bill here and there. I do like to have cash on hand if I’m going out for a drink with friends, because then I can’t overspend, which is easy to do when you’re out with others.

  • Nicola says:

    I love this idea – spending in cash makes it feel much more “real” in terms of spending actual money. Spending on plastic is all too easy at times .

  • I have never done this, but certainly will consider it if spending gets out of control. Like you said, I think it would be good to do a cash diet for our entertainment or eating out budget, as this is where we tend to overspend!

  • Will says:

    Carrying around cash is such a hassle! And I know this goes against so many articles but I actually spend cash faster than plastic. When I have cash laying around, I know it’s not doing work for me in a bank account. Plus, it’s so obnoxious to have in my pocket (the change especially). So I almost want to spend it just to get rid of it…

  • I pay all my bills via direct debit (autopayments) but I try to use cash for everything else. I usually withdraw my ‘spends’ at the beginning of the week. Once its gone, its gone. I really find this helps me budget and helps pay off my debt and preventing me accruing anymore.

  • I went on a cash diet when I decided to get rid of all my debt and it worked beautifully. I am no longer on that diet, but I treat it as such. I use my credit card but I track my spending using the envelope money system. I use an app and pretend that I am using actual envelopes. I know is not the same thing, but I haven’t gone over my budget in a long time.

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