How We Use the Cash Envelope System
Is the cash system for you? Ask yourself these questions.
Overspending on certain categories in your budget?
Reaching for your credit or debit card a little too often?
Not paying attention to the TOTAL when you check out at the grocery store?
Not meeting your financial goals as quickly as you want?
You have a good income, but you don’t know where your money is going!
THIS SYSTEM IS FOR YOU.
HOW TO USE THE CASH SYSTEM:
1. Set a BUDGET. A budget is NOT simply being aware of your spending. It’s assigning every dollar a home BEFORE your paycheck hits your account. It’s likely you won’t need CASH for every category. For example, you wouldn’t need to take out cash to pay your utilities or rent. When deciding what categories you should use CASH for, I find it helpful to plan to use cash in every category except your bills. You’ll also need to plan out if you are going to take out your cash every month or twice a month. I personally prefer taking cash out at the same rate I get paid, but it really comes down to personal preference!
HERE IS AN EXAMPLE OF WHAT THAT COULD LOOK LIKE
2. Plan ahead! Before you go to the bank and withdraw cash, know how much of each denomination you will need. When we do this, we write out each bill and let the Teller know how many of each bill we will need. We withdraw every denomination from $5 to $50, but yours could vary even more from $1 to $100 bill!
Something I’ve found helpful to make my dollar last a bit longer is to keep my cash at home until I know I will need it. For example, I keep my coffee money on me at ALL TIMES. I do not carry my cash from my grocery, gas or cosmetics with me at all times until I know I”m on my way to my hair appointment or running to the grocery store. If I have it on me at all times, I’m more likely to spend it!
3. Stick to the budget. The point of using cash is to make you more aware of your spending. Did you know that when using cash instead of card, you save on average 12%!? That’s HUGE! WHY? Because think about it this way…
SCENARIO ONE: You walk up to the counter to buy your latte. You hand them your card and they hand you your latte AND your card.
SCENARIO TWO: You walk up to the counter to buy your latte. You hand them your cash and they hand you your latte. They keep your cash.
Did you know that using cash engages the parietal lobe, the same part of your brain that processes PAIN!?
4. KEEP GOING. Using the cash system is a little extra work compared to using a budget and swiping a card. You may feel discouraged at times, but keep going. It’ll take a little bit of time to get the hang of it, but after a few months you’ll be a PRO.
I’ve gathered a few resources that may make the cash system even easier for those of you getting started!
Please contact me via email at firstname.lastname@example.org with any questions you may have!