The Thrifty Persons Guide To Cash Envelopes.

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Our family has used cash envelopes for years. In fact I can’t remember a time in our almost 20 years of marriage where we haven’t used cash envelopes to pay for at least a few day to day expenses.

The why how and what of using cash envelopes to save money

 2 Major Reasons People Use For Not Using Cash Envelopes & Why I Don’t Agree With Them

1.Carrying cash is  a safety issue

I hear this excuse a lot; “I don’t carry cash because I know this person who does and it got stolen out of their purse”. True cash can be stolen but so can your bank card number. Trust me I have personally had my bank card replaced twice now due to  leaked banked information both from in store purchase and online purchases.

2. Carrying cash is inconvenient

If people don’t mention the fear of getting their cash stolen to me then they usually bring up “I don’t want to make a trip to the ATM for cash it is inconvenient.  Yes it does take time to run to the bank for cash but, I think it takes less time than trying to add up all I spent at the end of the day to make sure  I didn’t go over budget.

2  Major Benefits Of Cash Envelopes

1.Cash Envelopes Save Money

We have a cash envelope for gas money. I know some would argue that gas is one of those expenses that you can use a debit card to pay with because you are not going to buy more gas than need, however we save 5 cents per gallon by paying cash at our local gas station and that savings adds up.

2.Cash Envelopes Make It Easier To Stick To A Budget

Cash is something physical you see in your hand. When it is gone it is gone. No fancy calculations and spreadsheets needed to keep track of how much you spent and how much you have left.

How To Decide What Expenses To Use Cash Envelopes For

Our family uses cash envelopes for date night, eating out, gas and misc (this usually goes for postage stamps, library fines, the odd thing we need here and there during the week).

You will notice that I don’t use cash for groceries. I did at one time but stopped; here is why, I love eating out, but I am naturally thrifty at the grocery store and won’t buy what isn’t on the list and my list total is always under our grocery budget.

What does that mean? It means that if I take out cash for groceries but don’t spend all the money on groceries I spend the extra in the envelope on take-out (yes I know this is a huge cash envelope no no). If I instead leave the grocery money in the bank and use what I call an in account envelope, I save up the extra to buy food in bulk at Sam’s club, or to take advantage of a rock bottom price deal and increase my savings. When my savings pool up to a significant amount we might consider transferring some out to help us meet a financial goal.

The trick is knowing what areas you naturally overspend in and what areas you are a natural thrifty person in. For those categories you overspend in use cash envelopes to keep you in line. For those areas you are generally thrifty in keep a running tab in your account instead.

Essentially cash envelopes are great for those areas of your budget that  are your weakest link. If clothes make you scream “charge it” making clothing a cash envelope.  If you are a foodie and have problem resisting gourmet food make groceries a cash envelope. You know what your weaknesses are.

Deciding On The Perfect Cash Envelope System For Your Needs

We started out with paper envelopes and had them for years. Then a few years back I got the idea to take a a TJMaxx bag apart and using colored duct tape made a set of sturdy and durable cash envelopes that are still going strong (that is a picture of  them above)

If you don’t want to make your own cash envelopes but still want something more long lasting than paper A Time For Everything is an Etsy Store  sells amazing cash envelopes in awesome patterns made out of a very durable fabric. (I am not an affiliate, I just happen to have seen reviews about these from people I trust, and heard the owner talk on the podcast Brilliant Business Moms and loved her story. This is truly a family business).

Another  option is to use a coupon size expanding file case. I have a friend who uses one of these for her cash. She keeps a small Vera Bradley change purse in the back of the file case for change. She really likes this system because she says it allows her plenty of room to keep receipts which she finds handy to refer to  when the money is gone and she wonders where it went.

Does your family use cash envelopes? Why or why not?

money saving tips a growing list (small)

Want to make the money in those envelopes go further? Check out all my money saving tips.

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  1. I hear the struggle about eating out. Sadly, I am not good at the grocery budget either, so I struggle with both of those problems.

  2. What a great resource for those looking into using a cash envelope system! I see your posts on pinterest all the time and just love them! Keep up the great work! Melissa Kaiserman of A Time for Everything is truly a fabulous lady and entrepreneur. We’ve gotten to know her super well since her interview and she is just one of the kindest, most helpful and genuine ladies I know! So yes, I too would tell people to support her business 🙂

    Thanks for sharing our podcast here!

    • I love your Brilliant Business Moms podcast. I look forward to the new one each week. I listen to it in the car, on the treadmill, or while cleaning my room. Great stuff!

  3. My husband started the cash envelope system last week. I like it so far. I’m not spending as much because I can see the budget for each category instead of one big wad.

    • I am glad it is working for you. It does take a bit of adjustment at first getting the right amount in each envelope but it is worth it.

  4. Great tips! I’m from New Zealand where we have had EFTPOS for like, 30 years, so I am very much out of the habit of carrying cash. We did try using cash envelopes but I kept forgetting them all the time 🙂 Now we use an electronic envelope app called GoodBudget which syncs with my husband’s phone so the totals in each envelope are kept up to date. The envelope system definitely works. Even though we use one electronically, we’ve saved so much money.

    • I have not heard of GoodBudget before. I tried an online enveloping system long before the days of smartphones and it was a lot of work, but an app would certainly take much of the work out of it.

  5. Years ago I used the envelope system and it worked so well I don’t know why I stopped using it. I was debt free using it! Now I am not. Recently, I have considered the envelope system and this site is confirmation I need to revisit that! I have noticed that I have a tendency to overspend and usually end up draining my savings because it’s so easy to just have it transferred from savings to my checking account. I think using the envelope system makes you more accountable &spending more responsible. When you physically see the cash going out quick, it gives you a better perspective on your spending. I definitely need to go back to this & get my spending under control. Thanks for your site!


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