Money

One simple strategy saved me thousands of dollars in 2017

At the beginning of 2017, I challenged myself to spend just $60 a week for eight weeks by going cash-only.

The $60 had to cover everything besides my fixed costs, so things like groceries, bars, laundry, transportation and any other daily expenses that popped up in my life in New York City.

I figured I would save money by ditching my plastic, but couldn't have predicted how much.

Turns out, this simple strategy saved me over $1,000 in just two months. That's a lot of money, and it doesn't include the savings that are automatically taken out of my paycheck and checking account.

Trading in my plastic for paper was incredibly effective, for a couple of reasons:

1. It added another barrier between me and spending money

It's easy to mindlessly swipe a credit card and forget you even bought something. Try handing over physical bills and watching your money disappear right in front of your eyes. Chances are, you'll start to think longer and harder before making purchases.

On the cash diet, I became a much more conscious spender, buying more of what I needed and less of what I wanted.

2. I was more in tune with exactly how much I was spending

In general, I'm pretty good with knowing about how much money I'm spending, as I keep track of my daily purchases in an Excel spreadsheet. But on the cash diet, I always knew exactly how much I had remaining in my budget — I simply opened my wallet and counted my bills.

It was also eye-opening to see how quickly cash can disappear with what I always imagined were small, insignificant purchases. A few short cab rides and I'd blown half my budget.

3. It forced me to stay on budget

I've always had a target number for how much I want to spend each week, but often, it's just that: A number that I hope to stick to. The temptation to spend, especially in a city like New York, coupled with unexpected expenses, makes it all too easy to go over.

The cash diet turned that abstract target number into something tangible: Physical cash that I could actually see and hold. It made my budget real in a new way. After all, once my wallet was empty, I was done spending for the week.

While I went cash only for all of my expenses (besides fixed costs), another option is to just use this strategy for areas you're trying to cut back on. For example, if you want to focus on trimming your grocery bill, determine how much you want to spend on food for the week or month and withdraw that amount of cash. When you head to the store, don't bring the plastic so you're not tempted to use it.

Looking back, the $60 weekly budget was pretty extreme, and I didn't ditch my plastic again in 2017, but the challenge made me realize that I could afford to set aside more money each month.

No matter how good you think you are with saving and budgeting, there's always room for improvement.

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