Inside: Trying to save more money? Want to keep better track of your money? Check out how to make a cash envelope system work for you.
One of my favorite ways to save money and watch what we spend is by using a cash envelope system. My husband and I started using the envelope system over 15 years ago. It has made such a difference in our finances.
Whether you are paying off debt or just want to keep better track of what you are spending a cash envelope system is an easy way to do it. It helps you learn where your spending weaknesses are and lets you tell your money where to go. Check out how to create a cash envelope system that works for you!
To start you will want to evaluate where you spend your money and make categories to match those. Look at the last couple of weeks spending to see where you normally spend and create categories for those different areas. For example, a few categories that I use with our cash envelope system is groceries, errands, dining out, and personal cash for everyone in our family.
You don't need to get everything perfect at first. Try it out for a couple of weeks and you may find that you need to change categories or adjust amounts in the categories. If you are wanting to save more money really push yourself to lower the amount in certain categories.
Plan For Cash or Card
Dave Ramsey may be a big fan of cash for everything but I am not. If the idea of using a cash envelope system seems overwhelming in some categories I completely understand. Figure out what categories you would like to use cash in and what categories you would like to use a debit card for. For example, we don't pay for gas from our envelope system. We have a gas card that we use instead. I also use separate bank accounts with debit cards for a few categories.
Normally, cash works really well for categories that you tend to overspend in or is easy to overspend like dining out or groceries. If you don't use the categories very often like clothing or Christmas shopping a bank account may work better for you.
Don't let wanting to use a debit card in one area deter you from using the cash envelope system. Just come up with a plan that works for you and your family.
Plan Your System
When you are just starting out with your cash envelope system you may want to use plain old white envelopes. It helps keep things easy to change around until you find what works for you. Once you get used to the system and really have things working you may want to find something more long-term than envelopes.
I have used everything from plain envelopes, accordion systems, and a cash envelope wallet. I love how easy and convenient it is to use a cash envelope wallet. They may cost a little more money, but if you really love your envelope system I think they are worth the money.
I personally use the cash envelope wallet from SavvyCents and it works great for our family. It has a spot for all of our categories, dividers, labels, spots for our debit cards, gift cards, an ID, and a pen holder. I can also slide my checkbook in it if I need to.
It's small enough I can put it in my purse to run errands or in the car for vacations. I chose a more feminine pattern but they come in black or brown leather too.
Plan for Online Shopping
Using a cash envelope system doesn't mean you need to give up your online shopping. You can still shop online you just need to plan for it. Whenever you need to order from Amazon or anywhere else online just skip getting the amount that week. Or if you remember last minute that you need to put in an order somewhere put the cash aside to deposit back in the bank. Online shopping works great with a cash envelope system as long as you remember to not spend the cash you have plus money on a debit card.
Using a cash envelope system is a great way to keep track of your money and make sure you don't overspend. You can easily save extra money every month to pay off debt or just keep an eye on your spending. With these easy tips you can make a cash envelope system work for you!
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