Managing your finances the way grandma did could help you save big time.
Technology has made it easier than ever to pay our bills, transfer cash and check how much (or how little) is in the bank, but when it comes to saving money, we’re pretty much on our own.
If you need help to set aside a stash of cash for a rainy day, perhaps it’s time to go back to basics and adopt some of grandma’s pennypinching techniques.
Here’s a popular life hack from back in the day: withdraw the amount you intend to spend for the whole month, and split the cash into envelopes labelled with categories like transport, housing goods, entertainment, rent, utilities and clothing. When one envelope is empty, stop spending on that section.
While it may sound almost primitive, this method works because it helps you to be mindful of your spending habits, since you’ll be reminded of how much you have left each time you reach for the envelope. You don’t have to use this method forever – just till you’re confident about your budgeting abilities.
Cold hard cash
When you spend cash, you immediately feel the pinch because you have less of it in your wallet. With credit cards, you won’t see the results of your spending until it’s the end of the month. So it’s no surprise that according to the 2001 study “Always Leave Home Without It”, we are willing to pay up to twice as much for an item when paying with a card instead of cash. While credit cards may be convenient to use and may offer attractive benefits, you might want to seriously consider going cash-only as the old school method could possibly help you save twice as much.
“It helps you to be mindful of your spending habits, since you’ll be reminded of how much you have left each time you reach for the envelope.”
Before the age of apps, people used to keep track of their expenses with good ol’ pen and paper. Do the same by keeping receipts of everything you buy and, at the end of each night, jot down your daily expenditure the old-fashioned way. Why not just use an app, you ask? Besides the fact that your phone would probably be more of a distraction, writing burns through your consciousness and prompts you to reflect on your spending – it’s hard to ignore those $15 lunches if you have to face up to them every so often.