I've eaten on $2 a day and tried living on an $8.15-an-hour salary in NYC - here is my single best tip for saving money
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More recently, I simulated the lives of millions of Americans who earn minimum or nearly minimum wage and lived on an $8.15-an-hour salary for 30 days.
After completing these challenges in one of the most expensive US cities - New York - I've learned a thing or two about how to stretch a limited amount of money.
The most effective strategy I used to save more and spend less during both experiments was refreshingly simple: I went cash-only.
At the start of each 30-day challenge, I headed to Wells Fargo and withdrew my allotted spending money in cash: $62 for the Elon Musk Challenge, and $150 for the minimum-wage challenge.
Trading in my plastic cards for cash helped me stick to a tight budget for a few reasons:
1. I knew exactly how much money I was spending at all times. When you're handing over bills instead of swiping cards you get a better idea of exactly how much money you're spending. It's eye-opening how quickly your cash can disappear with what you originally imagined were a few insignificant purchases.
It's also easier to track exactly how much money you have remaining in your budget - you simply open your wallet and count the bills.
2. I thought longer and harder about each purchase. There's something about watching your money physically disappear right before your eyes that causes you to value it more. You become a more conscious spender, buying more of what you need and less of what you want. I also found that I was less likely to make impulse buys.
3. It forced me to stay at or below budget. Anyone can have a target number for how much they want to spend each month, but often, it's just that: a number that we dreamed up and hope to stick to.
The cash-only diet turns that abstract, target number into something tangible - physical cash, that you can grasp - and brings your budget to life.
Once your wallet is empty, you're done spending for the month (or however long you planned your cash to last). Sure, it still requires discipline - after all, your debit and credit cards are technically active - but it puts one more barrier between you and spending money that you don't have.
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