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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.
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?
For a list of 52 different websites, apps, and stores our thrifty family uses to help us keep our expenses low, click here to visit our Thrifty Tools Resource Page.