How to manage your money without credit cards is simply a matter of living within your means. Although it sounds simple, it can be a bit difficult when you are the first to make the change. The goal, however, is not to spend more money than you actually earn within a certain time frame. Sticking to living within your means can be achieved by making and following a budget, and then paying all your items with cash, checks, automatic bank payments and debit cards.
The first most important step is to find out how much money you put in and how much money you spend each month . Budgets can be made on the basis of payment periods, but they are easier to manage when they are created monthly since, in general, the frequency of invoices for most households is done on a monthly basis.
An adequate budget will not allocate more outgoing money than incoming money. In other words, if you earn € 3,000 per month, the household spending budget should allow no more than € 3,000 per month . The entire budget should take into account occasional payments, such as annual insurance and property taxes, Christmas gifts, birthday gifts, and emergency funds for car repairs or for home modifications.
If you currently spend more money than you earn each month, you will have to reduce or eliminate your expenses in one or more areas. It is very important to make a budget based on actual income only. Credit cards are not a form of income and should never be included as such in the household budget.
Cash and checks
Living without credit cards means spending only what you really have. One of the easiest ways to force this is through the use of an old but effective technique that is known as budgeting techniques .
These budget techniques are defined as envelope systems labeled with cash in them
Label envelopes for a given budget category, for example, gasoline, food, entertainment, among others. Then add enough money to each of these to effectively pay what you owe.
If your budget allows you to give € 200 per month for gas and you get paid weekly, you can add € 50 to the corresponding envelope each week . When the time comes to buy gas, open the envelope and pay with the money that is there. Resist the temptation to grab money from envelopes since once the money has completely disappeared, you are not allowed to spend more on that budget category until a new month or until another budget period.
A similar approach can be used with checking the checkbook, but it is not always as effective. Instead of handling cash, write the budgeted amounts and categories in your check register, then write a check for each written category of the specific budget category and pay with that money.