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Best Way to Pay To Spend Less Money

Updated on July 10, 2008

There are really just four options when it comes to paying for an item. Cash, check, debit card or credit card. Have you ever stopped to think about whether the method of payment you choose has anything to do with how much you spend? Well, many people have done studies on this exact topic. So how should you pay for something in order to spend the least amount of money? Cash and cash only baby!

Paying cold, hard cash for whatever you are purchasing really does help you control your spending. It really does prevent you from over spending. Walking into the grocery store with $50 in cash to pay for my groceries forces me to keep track of my total in my head as I go. I have to really think before making any impulse purchases. If I were using a debit card I would not be as careful. Maybe in my head I would know that I could only spend $50 that week, but also knowing that I have a few hundred in the bank at the moment makes that $50 a target to strive for, not a necessity. If I am using a credit card, actually seeing the money come out of my pocket for those groceries seems so far down the line that I barely think about my "limit" at all.

I know that when I use my checking account to pay for something, whether it is writing a check or using my debit card, I do not have to be as strict as if I were paying with cash. We don't bring our account balance down to zero each pay period, so there is somewhat of a slush fund in there. Extra that isn't designated for anywhere. This extra helps cover if there are any mistakes on my end or at the bank. I don't have to worry about money so much having extra in the bank. However this comes back to bite me when I am shopping, as I know there is extra to cover some stuff. Therefore I don't pay as much attention when purchasing items and throwing those impulse purchases into the cart.

I have found that when I am using my credit card to purchase something I think to myself "Is there anything else I need while I am here?" I am so much more likely to add extra things to my cart, either in real life or shopping on the internet. I also like even numbers and will typically round up the amount I can spend to the nearest hundred when I am using a credit card. I have no idea why I do this, but I find myself thinking in along those lines and have to force myself not to.

We use the envelope system for groceries, toiletries, gifts, clothing, kids stuff and medical. We use our debit card for gas purchases. This keeps us out of the gas station where all those tempting candy bars are and actually helps us spend less. We use our checking account to either pay bills online or write a check to pay bills. We save our credit card for internet shopping (still have to be careful though!).

By setting up our finances this way we have trained ourselves to really think before we spend money. In the long run this saves money big time. It isn't that hard to get cash out of the bank at the beginning of each pay period and really helps with the ending balance at the end of the pay period. If you are looking to reduce the amount of money you spend or get a better grip on your finances, paying with cash for everything you can is the best way to do it. Using your debit card or writing a check is the next best thing. Even though you might get airline miles by using your credit card it still isn't a good idea. You end up with less money in the bank in the long run. Isn't the goal to have more money in the bank?


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    • morrisonspeaks profile image


      10 years ago

      i agree with you. credit cards are tempting.

    • profile image

      Michael Ruskow 

      10 years ago

      I love the term "Cold Hard Cash" This is some really good info for those of us who have to watch all our pennies.

      Thank You -

      Michael Ruskow

    • Squimpleton profile image

      Squintina Nightgard 

      10 years ago from New York

      I always use cash. I do have a debit card (that also happens to be a credit card) but I don't use it - I only have it in case someday I REALLY need.

    • proudgrandpa profile image


      10 years ago from Charlotte, NC

      Good advice. I am one of those rare birds who chooses not to have a credit card. I run two businesses and travel extensively and I seem to make it work with cash and check cards. I find it curious, even though our credit use is limited to our mortgage that we are penilized on our credit score for not having credit cards.

      It is a good thing that we recycle since we get dozens of credit card offers each week. NEIL

    • Dottie1 profile image


      10 years ago from MA, USA

      Thanks Jennifer, this is a very helpful hub.

    • trish1048 profile image


      10 years ago


      You brought to mind the system my parents used throughout their whole marriage. Envelopes. I used to sit at the kitchen table with them every Thursday and watch them put the money in their designated envelope. My mom worked as a waitress and she would faithfully put her tip money in either the vacation envelope, miscellaneous, or an envelope they had for 'large' purchases. I know for a fact this is how they used to be able to afford to take us on vacation every other summer out to the midwest and CA to visit family. What a great memory!

      Thanks for sharing,


    • Sally's Trove profile image


      10 years ago from Southeastern Pennsylvania

      From the other side of the fence, as a seller rather than a buyer, I am grateful for my customers who pay by check or money order. I don't think most consumers realize how much money sellers lose every time a customer pays with a credit card, or through some online system like PayPal.

      Your advice helps everyone!

    • sadonna23 profile image


      10 years ago from Alabama

      the envelope system really works! i use it for vacation, christmas and other holidays and events.

    • Eileen Hughes profile image

      Eileen Hughes 

      10 years ago from Northam Western Australia

      Very true, I suppose many people spend more than they should simply because they can. Limiting their credit limits would curb that overspending thats for sure.

      Thanks for sharing that


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