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Personal per diem

For the past week, I've been running a financial experiment. I'm no good at saving money --- I tend to spend as much as I have. To curtail that, I've been giving myself an allowance. Every day when I wake up, I give myself a twenty dollar bill.

That's right! First thing in the morning I reach into my nightstand, pull out a Jackson, and put it in my wallet. When I want to buy something, my wallet needs enough in it to cover it. Otherwise, I don't get it.

At the end of the day, I deposit leftover coins into a piggy bank and leave leftover bills in my wallet. That's an important distinction to make: this isn't a budget, it's an allowance. By accumulating change over the course of a few days, I can save up enough to buy a fancy dinner or a new saddle for my bike.

"Of course," you must be thinking. "That's elementary!" Indeed, it is. In fact, I got the idea from my own childhood. Chances are good that your parents gave you an allowance when you were a kid, too. I realized that an allowance allowed me to more effectively manage my money.

When I pay for everything with plastic, I don't have an intuitive sense for how quickly money is leaving my wallet. I'm used to using cash, though: saving it, counting it, spending it. All skills I've honed my whole life.

Plastic has a leg up on cash in one area, though. It's much easier to track spending if you buy everything on a card. My bank has plenty of tools for tracking and budgeting my money.

Since I'm paying for everything with cash, I had to come up with another solution. Recording all my expenses in a spreadsheet made sense and was easy to set up. At the end of the month, I'll be able to see where I'm spending the most money. I'll also be able to see if my allowance needs to be adjusted up or down.

So far, the experiment is going well and I'd recommend you try something similar. Buying everything with plastic alienated me from my bank account. It feels good to be able to physically see and handle my money. Plus, I've already saved more than $50!