How do you deal with unexpected expenses or emergencies when you live on cash only?

1 Benefits of cash only

One of the main benefits of living on cash only is that it helps you control your spending and stick to your budget. When you use cash, you can see exactly how much money you have and how much you can afford to spend. You also avoid paying interest, fees, and charges that come with using credit cards or other forms of debt. Living on cash only can also reduce your stress and anxiety, as you don't have to worry about paying bills, managing debt, or dealing with collectors.

3 How to prepare for emergencies

The best way to deal with emergencies when you live on cash only is to prepare for them in advance. This means setting aside some money every month for an emergency fund, which is a separate account that you only use for unexpected or urgent expenses. Ideally, you should have enough money in your emergency fund to cover at least three to six months of your living expenses. This way, you can handle most emergencies without having to borrow money or compromise your budget.

4 How to handle emergencies

If you do face an emergency that requires more cash than you have in your emergency fund, you have a few options to consider. One option is to use a debit card or a prepaid card, which are linked to your bank account or a balance that you load in advance. These cards can help you pay for online or electronic transactions, or withdraw cash from an ATM. However, you should be careful not to overdraft your account or incur fees or charges. Another option is to use a credit card or a loan, but only as a last resort and only if you can pay it back quickly and affordably. You should avoid using high-interest or predatory forms of debt, such as payday loans, title loans, or pawn shops, as they can trap you in a cycle of debt and worsen your financial situation.

5 How to avoid emergencies

The best way to deal with emergencies is to avoid them as much as possible. This means planning ahead, being proactive, and taking care of your health, your home, and your car. To prevent or reduce the cost of some emergencies, you should have regular check-ups and screenings, maintain your home, service your car, buy insurance, create a budget, save money, and build good financial habits. Additionally, you should track your spending, review your statements, and improve your credit score.

6 How to live on cash only

Living on cash only can be a rewarding and empowering way to manage your money, but it requires preparation, discipline, and creativity. To make it work, you should withdraw enough cash every week or month to cover your budgeted expenses. Divide your cash into different categories, such as groceries, utilities, entertainment, etc., and only spend what you have in each category. Additionally, keep some cash in a safe and accessible place for emergencies, track your cash spending, and adjust your budget as needed. Finally, reward yourself for sticking to your cash only plan and achieving your financial goals.