“When I have cash on me, I spend it faster.”
Have you ever said that before? I used to say that for years, until I changed my way of thinking and the way I handled cash. I was not going to allow cash to run me or my bank account. I was determined to tell cash what to do instead of it going where it wanted to go.
Prior to using the envelope system, I wouldn’t be caught with any cash on me and I would just stop by the ATM to get cash “if” I needed it. After the bills were paid, the money in the bank would be free game for whatever I wanted – WRONG. I even knew which ATMs would charge a fee and I would avoid those.
Last minute things for the kid’s school needs seemed to always come when I didn’t have any cash on me. I can remember saying to my child, “Don’t you know I don’t keep cash on me? Why didn’t you say something while I was still out?” I didn’t like that person and I was pushing my frustration on my child and that wasn’t fair. Most ATMs only dispenses $20 dollar bills so I would have to buy something I didn’t need to break down the bill. All the while, I’m blaming the school and my child for waiting until the last minute. Piss poor planning on my part.
Cash is called currency for a reason. It flows in your account or in your hand and it goes out by paying bills, debt, fees, writing checks, or swiping your debit card. If you’re not careful with managing how fast it flows, you will find yourself living paycheck-to-paycheck and having more month than money. That alone, is what’s causing unnecessary stress in so many homes.
I was able to get a handle on my cash by tracking where I was spending money and how much I was spending. Doing those two things for a few months allowed me to narrow down my budget categories and plug any leaks that was dripping too fast or where money was not flowing enough.
Some budget categories I use for my envelopes are groceries, gas, clothes/shoes, dining out, entertainment, holiday/birthday, kids school/sports, dog stuff, house miscellaneous, car miscellaneous, and blow money. Develop categories that work well for your family.
After the bills are paid, savings, and charity have been taken out, the remaining amount is divided amongst my envelope categories until every dollar and cent has been earmarked. I would then go to the bank, stand in the line, and wait until it’s my turn. When it’s my turn, I tell the bank teller how many I need in $20s, $10s, $5s, and $1s, so my envelopes can have the correct amount in each envelope. I fill each of my envelopes when I return home or when I’m in a secure area. The amount you put in each envelope depends on what you set for your family’s budget.
Cash can only be used for what it is intended for. When the envelope runs out, you have to wait until you get paid to replenish the envelope. Refrain from borrowing money from other envelopes. Using envelopes will seem too much at first but once you get your system down, the process will get easier and easier.
If you’ve tried it before and weren’t successful, give it another try. Always be aware of your surroundings. Yes, cash can be stolen just like credit cards, but one of the advantages of using cash, you don’t have to worry about cancelling cards and waiting for new ones to arrive. Only carry envelopes that you will need while you are out. With majority of people carrying credit cards, whose going to know that you are carrying cash.
I’ve been doing the envelope system consistently for eleven months. By taken a more proactive approach with my money, I paid off the remainder of my consumer debt and my fully funded emergency fund continues to grow.
Be the change that you want to see so you can leave a legacy for your family. Debt doesn’t have to rule you and having cash doesn’t have to be something you are afraid of managing. You do have the discipline. You can make sacrifices. You can be debt free. You can manage your money. Take a stand today!!!
Have you ever used the envelop method to control cash spending? Did it help?
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