I love credit cards. I know that in the PF blogging world, cash is often king, but I think if used responsibly, credit cards can offer many more advantages. My personal reason for using card versus cash is to get Air Miles. If I can get a free flight because I've used a credit card to buy things I would have purchased anyway, why not! So what that means is I never have/use cash.
But, I also love what Gail Vax-Oxlade advocates - the jar system, which uses cash. For anyone who doesn't know what this is, basically Gail tells you to have jars for each variable budget category - groceries, entertainment, transportation, clothing/gifts and misc. You put your budgeted cash in each jar and then whatever is left over at the end of the week/month, carries over to the next.
So what I think I'm going to do from here on out is to use something like the jar system, but an electronic one. Right now, if we have $250 budgeted for groceries, but only spend $195, that $55 sits in the chequing account and usually gets spent here and here without even realizing it. So then a week later when we want to go stock up on milk, fruit and bread, we are scrambling to find money. So, instead, I'm going to transfer that $55 into a separate account. And that way, in the future, if we run over budget for groceries, we will have that extra money sitting there waiting.
I'm going to do this for groceries, gas, entertainment, clothing/gifts and misc. I'm not sure what we'll do with the money if it hits a certain point. Like if we are under budget on a continual basis, we'll obviously wind up having a nice chunk of money sitting there. When it comes to clothing/gifts, entertainment and misc, I think we will have some money build up and then we spend it when birthdays come up, we want to do a big date night or one of us needs new clothes.
But our groceries and gas will build up over time and never need to be used because we'll never need to stock up on THAT much on food or gas. So I'm not sure what we'll do with it... something to think about.