The Cash Envelope System: a Guide for Beginners to help you save money
It’s so easy to use your Credit card and bank cards each and every day. This post will guide you through using a budget to help you use the Cash envelope system to save money today.
Do you forget that you are actually spending money?
Your not the only one and because of that, it’s so easy to rack up debts without realizing!
How about a system using cash? The Cash Envelope system works because you become hyper-aware of actually spending money BECAUSE it’s in the form of cash.
(If this post contains affiliate links please see our full disclosure policy although i have to warn you it is quite boring, but if you really must read it you can find it Here)
Budgeting can be a trial but if you follow a budget and use the cash envelope system you can save money. If you want more information on how to start a budget then check out this post:
Beginners Guide: Boost your Budget Like a Superstar!
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Right here we go:
What is the Cash Envelope System
Basically it’s what it says on the tin.
You have Budgets for each category for instance food, car.
Have envelopes for each category you need to pay bills for use cash for each of these envelopes so that you see how you are spending.
How do you start the Cash Envelope System
Think of all the categories you would need cash for food, gas, dining out, Health and gifts for instance.
Once you have worked out your Budget for the month you can start filling your envelope categories with those cash limits. For instance say you will only spend $300 dollars on groceries for the month make sure you envelope has $300 in it.
You could also make the envelopes up weekly rather than monthly this will mean you can’t touch your paycheck money in your account but it does mean that you won’t have a lot of cash hanging around.
This will be your food budget so you can not spend more than that.
For Food budgeting I find having a plan for the week really helpful to stop you over buying on groceries you don’t need.
Don’t forget to include irregular events like special meals out for birthdays and add extra for that event.
Advantages of the Cash Envelope System
- This make you accountable
- Forces you to not overspend
- Confronts your spending
What to do about Fixed Expenses
What are fixed expenses – these are things that you can’t change each month like rent, insurance, utilities or mortgage.
Most of us have these fixed amounts coming out of our accounts automatically so you have to remember to leave money in your bank account to cover these each month and only take cash out for non fixed expenses.
There are tonnes envelopes you can use:
White plain envelopes
Coloured envelopes
Hand sewn envelopes here is an example:
What about your ONLINE spending
Have a separate envelope for your online spending for items you would need to purchase online and make sure you add the money from the envelope into your credit or debit card to cover the purchase.
Forgotten Envelope money
A bit like the Online spending envelope. Have a separate envelope to add money into this and if you have to use your ATM card or cash in your wallet- might be an idea to carry an emergency amount. Then make sure you replenish your card or the emergency cash in your wallet.
Does it work?
At the end of the day its a budget and you need to stick to it!
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So I hope you found that useful it really is a revelation when you start using cash instead of your credit or debit card all the time its just so easy!
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