Yesterday was payday, which means at some point today Alan and I will make our way to the bank to get cash for our envelope system.
Paying cash for most of our purchases is paramount to meeting our financial goals because it forces us to stay in budget. For example, if my total at the grocery store is $101…but I only have $100, I am forced to put something back. Irritating? Sure. But, so, so helpful.
Over the past year, I’ve used this system and the traditional Dave Ramsey envelope system that comes with his Financial Peace University kit. Truth be told, I like our better! Its just a cute See Jane Work coupon organizer I found on clearance for $4.99 at Office Depot.
With the amount of cash we take out it seems to be less bulky and awkward than the FPU envelope system. Plus, I like that it can close all the way…and that I had space to add a cute little bag to hold my change. (It’s from a Similac pre-natal care pack! Ha!)
After a few months of finagling, we settled on 12 envelope categories: Grocery, Toiletries, Clothes, Gifts, Haircuts, Kid’s School, Special (e.g. money Em will earn from chores or money to spend when traveling to see family), Tithe, Kim’s Fun Money, Em and Livi. The girl’s categories are where I keep any birthday money they may get, etc. Don’t worry – Alan has fun money too, but he keeps it in his wallet.
These categories work really well for our family, but there are no right or wrong categories to have. Yours may be broader, like if you purchase toiletries at the same place you buy groceries, then you may just lump all of that together. Or, you may even need to be more specific. Either is fine.
The other thing about cash that is helpful, albeit inconvenient at times, it that using it causes you to plan ahead. I only carry the cash I need…not usually the entire envelope at one time. So, yes, it does stink when I remember that I need to pick up milk on the way home, but I don’t have the cash on hand. However, I am rarely able to make impulse purchases because it has become increasingly difficult to do so. And, if you are trying to reign in bad money habits, having this protective barrier in place is a good thing!
I hope this little bit of info is helpful for you and inspires you to create your own envelope system! I’m happy to answer any questions you may have about switching over to cash and would love to hear your tips as well!