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Would It Be More Effective to Go Cashless or Cash-Only?

There are several ways that people trying to reign control on their spending go about making a budget, and some of these strategies involve going cash-only or completely cashless.

Personally, I use a combination of cash and debit card and it's worked for me quite nicely; in fact, it's hard to picture handling my finances another way. However, both the cash-only and cashless camps make good points about why taking their sides could work for someone seeking a new budgeting strategy to get her on track. Discover the differences when you


Those on team cash-only have followed the recommendations of personal finance guru Dave Ramsey and his envelope budgeting system. His system is straightforward and simple: It instructs that you literally divide your monthly paycheck into envelopes (except for bills paid by check or auto-withdraw), and once an envelope is empty you can't spend money on that category until next month.

Ramsey argues that relying on debit cards can cause you to spend more because there isn't the same psychological connection there is to handing over cash for expenses. Those who do go cashless retort that carrying cash can have the opposite effect of spending more and making more impulse purchases. They note it's easier to track spending by using a debit card between all of the online expense tracking and budgeting applications available along with standard online account visibility.

Which of these methods do you think is more effective? Do you have a unique system of your own that gets the job done?


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