Mix it up with the cash combo spending plan

Last time I talked about the all-cash spending plan and the pluses and minuses with it. The most obvious minus is that paying bills in cash often incurs extra charges and is a giant faff.

Introducing the cash combo plan. All the convenience of electronic payments, just as tangible and intuitive as the all-cash plan.

Here’s how it works. You set up automated payments for all your bills, savings, insurances, and credit repayments. Make sure there’s enough in your current account to cover these each week/month, plus a little bit of extra, in case any of the bills is higher than expected. Then you withdraw the money for your spending including both essentials like groceries and more fun things like renting a movie.

You can treat the cash like you do for the all-cash plan, sorting it into envelopes for different types of expenses.

You’ll probably need more envelopes than this, especially if you have children.

Alternatively you can just have two envelopes, one for “essentials” and one for “non-essentials”. The key is to be over-generous with the “essential” envelope and not take money out of it, except for your those essential expenses, until you get to the end of the week/month. The one downside with doing things this way is you’ll know less about where your money is going than with the “types of expense” version.

Two nice, big, fat envelopes. More simplicity, less control.

At the end of the week/month if there’s still money in the “essential” envelope, you can decide whether to put it back into a savings/investment account or to treat yourself.

One thing to bear in mind is that because bills are easier to manage on a month by month basis but spending is easier to manage on a week by week basis, you may also choose to withdraw your spending cash weekly or to withdraw for the month, but have weekly envelopes.

You do know only February has four weeks, right?

So, what do you think? Would you find the cash combo spending plan useful?

For more on different ways to create a spending plan listen to my podcast, Squanderlust.