Do you ever get to the end of the month and ask, "Where did all my money go?" Budgeting with cash can be very productive if you're trying to abide by a specific budget, especially if you're trying to climb out of debt.

Typically a "Cash Budget" is an accounting term for businesses, but it can be applied to your personal finances as well. It's basically the tracking of the flow of cash in and out in a given time period. A cash budget allows you to easily see where you're spending your money each month and actually HOW much you're spending. Knowing where your money is going helps you to determine what areas can be cut back to allow for additional savings or debt reduction.

First, track your spending over a month. Either go back over last month's bank statement, or use a budgeting worksheet to track your spending over the upcoming month.

Use only cash to pay for anything above your fixed expenses. Fixed expenses would be your mortgage/rent, car payment, gas bills, insurance, etc… any bill that doesn't fluctuate each month. Use your cash for the variable expenses that you're more able to control, such as groceries, eating out, entertainment, buying clothes, etc.

Designate a specific amount for each of your variable expenses, and pull out the allocated amount of cash needed for each of these expenses. Put the cash in separate envelopes, and label it with each type of expense. For instance, set aside $600 in an envelope labeled "Groceries." As you go to the grocery store, pull out the allotted amount you'll need for the week, and only spend that amount. This will help you stay within your budgeted amount.

Now, as you get a better idea of your spending habits, your budget and allocated cash amounts may need to change. Continue to track your spending with the budget worksheet to help you with these adjustments.