One of my goals for 2012 (listed under financial) was to begin using a cash envelope system for our spending outside of our monthly bills and aside from a couple of other categories such as gas for our vehicles.
I’ve been doing it for about 2 weeks now and while I am still a certified newbie at this, I can’t speak more highly of it!
For those of you who don’t budget, wouldn’t consider yourself frugal in the least, and have no clue what I’m talking about, here’s the basic gist – use cash for most (if not all) purchases outside of your monthly bills.
There are a few reasons why I am finding that this is a fantastic way to handle our spending (in the 2 short weeks we’ve been doing it).
1. It forces us to stick to our budget.
After Kevin and I agreed to the budget for January, I filled up each envelope with the determined amount of money. Once it’s gone, it’s gone! Some may argue that using a debit card system is just as good because it prevents you from doing into debt, however, I would argue that using a debit card does not prevent you from over-spending! Yes, avoiding debt is certainly nice, but preventing over-spending is even better!
2. It forces us to think more before spending.
Now that I know what I have to spend for the month, I am much more careful about what I am buying. For example, do I really need these really cheap crackers that I have a great coupon for? Or does my family really need a gallon of milk? Using cash forces me to prioritize needs versus wants very quickly! Also, it hurts a lot more to spend in cash, so I make sure that what I am purchasing is really what I want or need!
3. It forces me to plan ahead for my spending.
While I have been doing cash only for my grocery budget for a bit now, using cash for the other areas of my spending forces me to plan ahead much more. Kevin and I are hoping to take a family vacation this summer and we are going to be using our “vacation” envelope to help us save each month!
Back in the day, this was the only way to run a household, but with the age of debit and credit cards, it’s become a thing of the past…..which has gotten many people into a lot of trouble. But, I’m not here to judge! 🙂 My goal here today is just to share how we have chosen to implement it and perhaps encourage you to consider giving it a try at some point!
After deciding to give this a try, my first step was to sit down with Kevin and plan out the budget for the month. While we have been more intentional about sitting down together to agree to the budget each month (and praying over it as well) prior to this, I wanted to make sure we were definitely on the same page with it since we were implementing something new that would change the way we spend money!
Once we were in agreement regarding the categories of the budget, I went to the bank to withdraw the money we would need to fill the envelopes! My envelopes themselves are just ordinary envelopes with pieces of colored construction paper glued to the front and labelled with the name of the category. I have seen some really precious ways to make this system a little more exciting and CUTE! If I had some scrapbook paper lying around, I’d have been all over this idea!
Now, that our envelopes are filled, it’s just a matter of using that precious cash wisely throughout the month! As I mentioned above under some of the benefits of using cash, I’m hoping to have leftover money in some of the envelopes at the end of the month. We’ll have to decide how we handle that if it happens, but my thought would be to let some of is accrue up to a certain amount and then eventually spend it on pricier necessities or put it away in savings!
I’ll have to report back at the end of the month on how things went! So far, so good!