The All Cash Diet: 3 Easy Steps To Reduce Your Spending

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All Cash Diet

How much did you spend on groceries in the past week?  Or how about at restaurants? 

If you can’t answer that question, I’d guess that you typically pay for purchases using a debit or credit card. 

Credit cards make spending money on the things we want and need extremely convenient.  They also tend to promote higher spending for most people. 

That’s why a cash diet can be an incredible way to help you stick to your budget and save money. 

What Is a Cash Diet?

A cash diet is a low card, high cash diet that involves almost completely eliminating your credit and debit cards.  This reduction in cards puts your wallet into an enhanced state of savings. 

Simply stated, a cash diet means using only cash for purchases.  People have a tendency to overspend when using their cards, so eliminating the temptation and budgeting a set amount each day, week, and month helps drive better savings habits

How a Cash Diet Saves You Money

Would you agree that swiping your debit or credit cards makes shopping more convenient?  It may even feel like you’re not spending your own money. 

There’s research that suggests that people are willing to spend up to 83% more when using a credit card instead of using cash.  

Cash is a tangible asset, meaning it can be physically held and holds a value.  When you use cash, you have to physically take it from your purse or wallet and hand it over to someone else.  You can instantly see that you have less cash than you did before.  Painful right?  

Think about your last few trips to the grocery store.  How many times did you spend more than you budgeted for?

What if your budget shows that you shouldn’t spend more than $100 at the grocery store each week and you only bring $100 during your next visit?  You have no choice but to stick to your $100 budget. 

The same could go for your next visit to a restaurant, or the shopping mall.  Really, anywhere that has some sort of discretionary spending where you could save money.  By figuring out how much you’d like to spend in these categories and limiting it by only using cash, you avoiding overspending. 

How to Start Your Cash Diet

The beauty of a cash diet is you don’t have to dive in full steam.  Making drastic changes, especially when concerning money, is the easiest way to fail.

Step 1 – Choose a Category

Try starting out with only one or two categories, such as grocery spending or eating out.  Those are two expenses that I consistently overspend on. 

Here’s a list of the most common categories that are great for a cash diet.

  • Grocery Stores
  • Restaurants/Eating Out
  • Entertainment
  • Clothing
  • Home Goods
  • Home Improvement
  • Personal Care
stop spending save money

Also, don’t go into this thinking it has to last forever.  Make this a cash challenge, where you’re committed to trying it out for one week.  After that, see if you can go another week. 

Eventually, the goal might be to go back to using your debit and credit cards, but much more diligently that you used them before. 

Step 2 – Determine Your Budget

Now that you know which expenses you’re looking to target, figure out how much you spend on average.  This is where you’ll have to do some digging into your personal finances. 

Let’s assume you chose the grocery store and you always use your credit card when you shop there.  Look at your previous credit card statements and write down how much you spend each month. 

Here’s a template to help you get started. 

Pin Cash Diet

I would suggest looking back at least 3 months.  The further the better so you can get a good understanding of your average monthly spend in that category. 

Here is a formula for determining your average spend:  If you’re looking back 3 months, add up all 3 months then divide by 3.  Month 1 + Month 2 + Month 3 = Total spend for 3 months.  Now, divide that by 3.  This gives you your average monthly spending.  If you’re looking at 6 months, add all 6 months then divide by 6.  (month 1+2+3+4+5+6)/6 = average 6 month spend. 

Your goal is to save money, so just budgeting for your average spend isn’t the best idea. 

I would suggest that you find a month that you spent less than what the average has been over a 3 to 6-month period.  Make sure there wasn’t a reason for spending less that month, such as a vacation. 

Do you think you could spend around 10% less than you spent that month?  Don’t starve yourself or your family…just try and determine if you could manage to spend less. 

For example, let’s say you’ve determined that you spend an average of $600 per month on groceries.  In month 2, you spent the least amount which totaled $510.  If you try and shave off another 10% from that month, your grocery budget will be $459 each month.  ($510 x 0.90 = $459).

If you go grocery shopping every week, divide your monthly budgeted amount by 4.  That means your weekly grocery budget is $115. 

Try only taking $115 to the grocery store the next time you visit.  That way you can’t overspend. 

Step 3 – Track Your Results

If you’re sticking to your plan, this will be the fun part! 

This cash only budget for your groceries would save you $140 every month.  If you can commit to this for an entire year, that’s $1,680 saved just in groceries! 

The trick is to set reasonable goals that you can accomplish.  You do not want to set unrealistic goals that lead to failure and quitting. 

It’s important to stock this savings away into your savings account, or maybe put it towards outstanding credit card debt.  Just don’t go squandering this newly found money!

If you plan to put all your savings into a bank account, tracking is easy.  You can see the account increase over time and know exactly how much you’ve saved.

It’s ok if the money isn’t all put into savings, just track the amount you are saving and keep a savings journal.  Seeing how much you save is a huge motivation. 


Debit and credit cards make life convenient.  A quick tap here, a swipe there and you’re the proud new owner of a 75” TV!

Cash is not only inconvenient, but it’s not as safe as carrying a debit or credit card.  If you lose one of your cards, or worse, someone takes them from you, it’s not a problem.  They can be easily canceled with a phone call. 

If you lose cash, it’s gone forever.  It’s best to keep minimal amounts on you for safety concerns.  

My suggestion is to make sure you’re using a bank that either has many ATM’s for pulling out cash or a bank that will reimburse any ATM surcharges.  That way you can visit an ATM before you shop.

ATM Cash Diet


I mentioned earlier that the cash diet almost entirely eliminates the use of debit and credit cards.  The cash diet isn’t meant to rid you of debit and credit cards entirely.  It’s mainly aimed at saving you money on certain categories that you overspend on. 

If you choose clothing as your category and you normally shop online, you can still utilize the cash diet.  It just takes more diligence as you’ll want to pay off your credit card immediately after using it. 

I found that going on an all cash diet was an excellent way to stick to my budget. 

I might even say it’s the best option for anyone who has trouble starting or sticking to a budget.  By only bringing the amount you budget for, you have no choice but to stick to that amount.  There’s no better way to enforce your budget than that!

What category(s) will you choose for your cash diet and path to financial success? 

Paul W

Hello! I'm Paul, finance expert and founder of The Income Finder. With over 15 years experience in the finance industry, a bachelors from Benedictine University and MBA from DePaul, I'm well qualified and ready to share great insight and tips on money management. Read More