We are going to cash!

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Well one of our changes for 2012 (which I should have mentioned here) is that we are moving to a mostly cash budget! This is the approach that many money-wise people I know use in order to stay within their budget! With cash, once the cash envelope is empty, it’s empty. You can’t go over budget. And not only that, but when you spend money, you “feel” it more. What I mean by that is you are physically handing over cash and seeing your money dwindle, rather than just swiping a card. Hopefully this will make us more intentional with our purchases.

Many people switch to this method to ensure they don’t go over on spending in an area. For me, I am a numbers person and pretty disciplined, so we usually (though I’d be lying if I said never) did not go over budget when using a spreadsheet. But I did get exhausted and behind when trying to keep track of each little purchase via spreadsheet!! After talking to a few friends, we decided the money envelopes method was the way to go!

And just to get excited, I spruced up our envelopes to make them pretty. I used our extra Christmas card envelopes and markers! It’s like high school all over again.

Our categories for our envelopes are:

  • Clothing
  • Gifts
  • His and Hers
  • Going Out
  • Pets
  • Hair cuts
  • Miscellaneous
  • Groceries, Toiletries, and Home Goods (Anything I’d get at the grocery store or Target.)
  • Home Maintenance.

Obviously we don’t do every category of our budget cash. Utilities, for example, wouldn’t make sense because we pay that online. And some categories we don’t use monthly, such as auto maintenance, though we are still debating if this should be cash.

As for keeping track of the envelope money, I have a list of how much goes into each envelope. I totaled the amount and figured out how many of each bill I need. This makes it easy for going to the bank. I can tell them – 10 five dollar bills, 8 ten dollar bills, etc. Also I wrote the amount that should go in each envelope on the inside flap. Of course, I can always scratch this out and write a new number, as our budgeting needs change, but it’s a helpful reminder.

Some of you may need to first take a step back and create a budget. I encourage you to do so, no matter how much you make! Learn more about budgeting here.

What does your budgeting system look like? If you use cash envelopes, do you have categories I don’t?

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  1. Girl! You’ll never look back. 🙂 I’ve had my cash envelopes since the day we got married and I love them. They’re a huge security system for me – I don’t wonder how much I have…..I know. 🙂 Good luck!
    Stacy Makes Cents recently posted..My Favorite Sweet Bread: Chunky Apple BreadMy Profile

  2. this is a GREAT idea! I need budgeting help big time!
    Jillian recently posted..little remindersMy Profile

  3. So excited for you guys…you will love it!! It’s so satisfying and concrete.

    After talking with you some and then collaborating with the hubby, we decided to add a “miscellaneous” envelope (that will include gifts each month). So for 2012 our envelopes are: groceries (includes toiletries, dog food, etc.), eating out, miscellaneous, hubby’s gas (he likes to pay cash but I don’t like to have to leave the car with baby, so I use debit), and blow money (similar to your “his and hers” I would assume). I do the same thing usually where I write out how many of each bill we need (great minds think alike!). We usually use ziploc bags that are labeled with the envelope name and how much goes in that “envelope”. However, I also got fancy with my grocery and eating out envelope and asked for a small Vera Bradley coin bag that I use for each of those. Finally…one more thing I do is keep restaurant coupons in our eating out envelope. Whew…this got long. 🙂

    Thanks for the budgeting inspiration, friend!! You helped light a fire under me to get our envelope system re-charged for 2012!
    Cait recently posted..Fitness Friday–Starts Today!My Profile

  4. We first learned of doing a cash budget when we took a Dave Ramsey class 7 years ago. Usually we just have had cash envelope for groceries because I do not like cash laying around. We didn’t have much for creating envelopes each time but we started again with blow money for each of us, other/misc, clothing (I used to just go get socks etc when needed). Another problem we have is trying to specifically budget for bulk items and stock up items. So I took $40 of my grocery budget and put it in another envelope labeled “stock up and bulk items and non grocery items.” This is our first week doing it this way so we will see how it goes. I hated taking out money for a huge box of diapers from costco from my grocery budget so this time it is actually set aside win we need it.
    Every summer I started a vacation cash envelope but credit unions have these things called shares that you can label as “vacation” and whatever you want so I started my “envelope” at my credit union. I may start a car fund too.

  5. We have been introduced to ynab (dot) com. “you need a budget” This is an awesome software system that’s very similar to the envelope system but doesn’t require you to carry “cash” . You still assign each dollar a job and spend accordingly. And it keeps you living on what you have not what you might have in 2 weeks. I *highly* recommend it!! I’ve had 2 friends recommend to me and I’ve recommended to multiple friends and they are all loving it!

    There is a cost to the software but you can do a free 30 day trial and that totally won me over.

    You can also get a $6 discount if you use this link… http://ynab.refr.cc/7RNWQ42

    Wow.. reading this comment I sound like a commercial… I promise I don’t work for YNAB 😉 But full disclosure – I do earn $6 when someone signs up from my link…

    • Yes! I’ve heard of that. Many people from our church actually use YNAB. I love having the physical envelopes with me, but from what I’ve heard, YNAB could be great for those who don’t want to carry cash! Thanks for sharing about your experience with it!

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