One of the harder things to do when getting your finances in order is overcoming cravings. Lots of people, if not everyone, has a list of items they would like to buy. Some of those items are day to day things like getting your favorite fast food for lunch or dinner.
To help cure your cravings for little day to day expenses you can make yourself “wallet broke.”
The first step to becoming “wallet broke” is making a budget that only includes the monthly bills you must pay. This includes the minimum payment on any credit cards you have. The total of these bills is the amount of money that will be taken out of your bank account whether the money is there or not. So there’s the motivation to not spend that chunk of money.
Now, you probably see that you have money left over. After all you didn’t include food, gas, entertainment, etc. But those expenses are made on the spot. They’re not scheduled and automatically withdrawn under threat of dings to your credit if the money isn’t there. So take the money out of your checking account. I like to leave at least something in my checking account. That extra money rolls into the next pay period and only after the next pay day do I re-evaluate the extra funds and what to do with them.
I like to keep cash on hand. However, it’s generally not a good idea to have wads of cash on hand so move most of the extra money to a savings account and just keep some of it as cash. The point of having cash on hand is that it deposits instantly and is accepted everywhere. It also can’t be spent if it’s not in your wallet.
And that is the key to being “wallet broke.” By reducing your bank account to have only the funds to cover the bills that must be paid it’s very easy to not bust out the bank card for day to day expenses. Because you know if you do you could miss a very important payment and suddenly be in a world of hurt. So even though you keep your bank card with you “just in case” it’s very easy to not give in to a craving for fast food or a shiney trinket. The bank card is just enough to fill up your car with gas one or two times.
The second part of being wallet broke is not carrying cash around. That’s right, you keep cash on hand but you don’t keep it in hand. If I know I need to fill up my car with gas that’s a legitimate reason to grab a $20 from my stash and that’s all that goes in my wallet. So when I’m out for the day I only have $20 and I have to put it towards gas or I won’t be getting to work.
You could convince yourself that you can just grab another $20 when you get home but while you’re out you have several hours to think that plan over and suddenly the craving for whatever it is you wanted is gone. You fill up your tank, you go home and the desire to put another $20 in your wallet is gone.
The whole point of being wallet broke is keeping that constant feeling that you “can’t afford it.” And eventually “can’t afford it” turns into “I don’t really want it anyway.” And maybe down the road your wants will go away completely. HA!
It’s not about getting rid of your wants. It’s about becoming conscious of money. You can have the things you want. You’re just learning to control your impulse spending so the things you want are the things you’ve really thought about. Not the things you made 2 second decisions on.
From day to day I want fast food. But I recognize that I’m wallet broke so I can’t afford it in the moment. The moment passes, I avoid wasting money. I also want a new server, a big screen tv and a sleep number bed. I’ve wanted those things for a long time, so for the next several months to a year I take the money I’m not spending on impulse buys and put it away and in not too much time I’ll have all those things without going into debt.
So to sum it up, being wallet broke means:
* carrying around a single bank card that only has enough extra money to cover one or two tanks of gas
* not carrying around cash except when you know exactly how much you need for a predetermined product (gas, food, trinket, etc)
* not having any credit cards in your wallet
