Cash Blog

Make the Switch to Cash-Only Budgeting with SMART Goals

Wednesday, November 08, 2017

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Company: ATM Industry Association

Having a tough time making a budget and sticking to it? You’re not alone. Many people in your shoes switch to a cash-only budget. Sometimes they do this for just a few categories—say, groceries or gas—and other times they go all-in and commit to cash only for all expenditure, period.

Why do people do this?  They say they feel different when they use cash. Cash forces you  to practice conscious spending, to be aware of where every dollar is going because you can physically feel it, see it and see your stash diminishing!. In short, when you spend with cash you  become hyper-aware of how much things really cost. The result? You naturally slow spending and are a heck of a lot more thoughtful about your purchases.
Goals help you stay focused
One way to nail a cash-only budget is the envelope system, which
we previously chronicled here. But another important factor in  successful budgeting are savings goals. Goals are crucial to helping to maintain your focus and reminding you of why you’re making all the effort in the first place.

SMART  is a common goal-setting methodology, used personally and in businesses. SMART stands for Specific, Measurable, Attainable, Relevant, Time-Oriented. The perfect goal includes each of these elements. SMART goals are effective because they rule out goals that can’t be measured, or are too vague, such as “I want to lose weight” or “I want to become debt-free.” Both examples don’t reference any sort of timeline or specifics, making you less likely to keep your eye on the prize.

Crafting the perfect goal
Check out the differences in these two goals. Both are related to saving money. But one is incredibly specific, while the other is more of a vague aspiration.

Poorly written goal: I want to save more money.

SMART goal: I want to save 10 percent of every paycheck until I have reached enough money to pay off my car.

You don’t need to be an expert in motivation to see which goal is going to be more effective. You’re doing yourself a favor by jotting down the details. It forms a psychological commitment, giving you a path to achieving something you greatly desire…versus, well…just wishing.

Ready to make your first goal? Take some time to consider what you really want in life. What’s a treat that you’ve had your eye on? What’s something you’ve really wanted, but have put off buying because it’s just so expensive? Or, is there a goal like having a certain amount in your emergency fund that will bring you peace of mind? Answering these questions makes your goal relevant.

Next, add in the specifics
about exactly how you will attain your goal, and in what timeframe (time-oriented). Make sure it’s reasonable. Do you think you can truly accomplish your goal? For example, if you are looking to save more than 10 percent a week, are you able to comfortably live while socking that much money away? If the answer is no, then your goal is probably not attainable.

Crafting SMART, thoughtful goals will not only put you in the right mindset for saving, but will make it more likely that you can successfully make the switch to cash-only budgeting and spending. And, once you make the transition to cash, you’ll likely be amazed at how much more you can save!

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