The Great Cash Debate: Dave Ramsey vs. Us – Who’s Right About Money?

In the world of personal finance, there are few figures as polarizing as Dave Ramsey. Known for his no-nonsense approach to money management, Ramsey has been a beacon of financial wisdom for many. Of course, we love him and often joke about how he is our close personal friend. (See photographic evidence below) Unfortunately he’s not, but he is the one that set both of us on this path and we did go through his coach certification program.

One of his most debated topics is the use of cash in managing your finances. But, as financial coaches who are all about helping you make the most of your money, we have a slightly different take on this age-old debate.

As we’ve said before, we are not a one-size-fits-all business. We tailor our method to your life and your goals. For some of our clients, that means never using cash. For others it means using cash on as many budget line items as possible. So, let’s dive in and we’ll tell you where we stand compared to him on the cash debate.

Cash Envelope System: A Time-Tested Method

Dave Ramsey is a big advocate for the cash envelope system, where you allocate cash for different spending categories in your budget. We’re on board with this system, and here’s why: It’s tried and true, dating back to our grandparents’ days. It’s a great way to create a strong emotional connection to your spending. When you physically see the money leaving your wallet, you’re more conscious of your spending. It’s a great way to avoid those small but add-up-over-time purchases.

Digital Envelopes: The Best of Both Worlds

While we recommend incorporating digital envelopes for certain savings buckets and spending items, starting with cash is fantastic. It makes you more mindful of your spending, and you’ll be less likely to overspend. Combining the tangible nature of cash with the convenience of digital tools can be a winning strategy.

Impulse Buys: Cash Puts the Brakes on Impulse Spending

Cash limits impulse buys. It’s easy to tap your card for that latte or snack, but when you’re physically handing over cash, you’re more likely to think twice. This is a fantastic way to avoid those spontaneous but budget-busting purchases.

No Hidden Fees: Cash Means No Unpleasant Surprises

Using cash means no overdraft fees, late payment fees, or interest charges. You’re in control of your spending without any unpleasant surprises. It’s budgeting with transparency and zero unexpected financial hits.

Delayed Gratification: The Art of Saving

Cash forces you to save up for bigger purchases, fostering delayed gratification. This is a key financial skill that helps you make better choices. Saving up for that vacation or new gadget becomes a satisfying accomplishment.

No Credit Card Rewards: Chasing a Myth?

While some tout credit card rewards, the reality is most people end up spending more to chase those rewards. Plus, you’re probably not the financial unicorn who can master this strategy without falling into debt. Cash might not offer points, but it also doesn’t lead you down a slippery slope of overspending.

Inconvenience Is a Good Thing

Cash should be a bit inconvenient. It’s a hurdle to spending, and that’s precisely what you need to break bad financial habits. When your money is harder to part with, you’re more intentional about where it goes.

Credit History: Can You Really Build It Without Credit Cards?

Contrary to popular belief, you don’t need credit cards to build credit history. A mortgage and other “responsible” debts can do the job while you focus on paying off existing debt. Don’t let the fear of a nonexistent credit history keep you tethered to credit cards.

Safety Concerns: Cash vs. Cards

Carrying a reasonable amount of cash for daily needs is safer than carrying around credit cards that can be easily scanned or stolen. In an age of digital vulnerabilities, cash offers a layer of security that’s hard to replicate.

Apps and Syncing: The Hands-On Approach

While cash doesn’t sync with budgeting apps, doing your budget the old-fashioned way on paper or using a tool like our Budget Power Hour can be more effective. It forces you to be hands-on with your finances, promoting a deeper connection with your money.

Conclusion: Embrace the Cash Envelope System

In summary, using cash is a powerful way to take control of your budget and financial life. It may not be as convenient as swiping a card, but the benefits in terms of mindfulness, avoiding debt, and building responsible financial habits are well worth it. Embrace the cash envelope system and take charge of your financial journey! 💰✉️📊

So, Dave Ramsey fans, you’ve heard our take on the great cash debate. Now, it’s your turn to decide. Do you agree with us or not? And don’t forget, when it comes to your money, the choice is ultimately yours!