Do you stick to your budget? Many families have an idea of how much they want to spend on variable expenses, but don’t actually keep track of the amount spent.
If you start tracking your expenses, it can be shocking to see how much you’re really spending. If you find that you’re living paycheck to paycheck or wondering where all your money goes, you need to think about the cash envelope system and how it works with your budget.
Encourages Better Planning
So many people go through life just winging it. You go to the grocery store and wander the aisles aimlessly, tossing things that look good into your cart. When you’re forced to only use what’s in an envelope, you are much better prepared when you go shopping. You’ll be more likely to see what you have on hand and make a menu based on those ingredients. This will greatly reduce the amount of spending.
Forces You to Stick with a Certain Amount
How many times have you gone shopping and said to yourself, “I’m only going to spend $100?” but, you go over the limit? It happens all the time. However, the cash envelope system puts an end to that. When you go shopping you have the amount in your envelope and that’s it. Your debit and credit cards are at home.
Teaches You to Look for Free Options
When you no longer shop as if you have unlimited funds, you will be more careful with your money. This includes looking for free options. You might choose restaurants that offer free meals for kids. You might choose to go to the library rather than shopping for new books. Regardless, you’ll become a master of free entertainment.
Discourages Random Spending
Bored? Why not go shopping? If this sounds like you, you definitely need to utilize the cash envelope system. Random spending quickly eats up your budget. That doesn’t mean you can’t have money for fun, but it does mean that you are limited in how much money you can blow to what's in that specific envelope.
Helps You Save for the Future
As you become more and more careful with your funds, you’ll find that you have money left over at the end of the pay period. This money can be rolled over into the next pay period so that you have extra money for the weeks where more spending is required. Or, you could put the money into a savings account to start building an emergency fund.
The cash envelope system is great for those that have trouble sticking to a budget. Only having a certain amount to spend really does help you make better choices and to plan better. Try it and see what you think.