3 Steps back to the sanity of cash by MP Dunleavey shares a story of how she and her husband chose to purchase replacement appliances with cash, instead of credit, and how it made them more fiscally responsible and personally satisfied.
To me, paying with cash was a great way to improve our personal finance habits. When I graduated from college, being on a cash basis helped me learn to manage my finances. We use the principle of paying with cash to simplify our budgeting process and to stay within our means when buying a car.
Essentially, paying with cash created more financial discipline because it was a limited resource, and thus choices and tradeoffs needed to made by us. For example, due to limited cash, we sometimes needed to decide what to buy, and what not to buy. Thus, paying with cash helped us learn to live within our means.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.
This is not financial advice. Please consult a professional advisor.
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