Good morning!!
Last time we talked I let you guys know a little bit about why I have to set a budget for myself. If you don't know, go read my last post here!
If you clicked on this post, you might be wondering what the heck is the cash envelope method and why does she use it? So here are my top 5 reasons you might want to start using the cash envelope method.
First, you may be wondering.. what is the cash envelope method? This is a method where you separate your money after you've paid bills into different categories based on what you think you will need before the next time you get paid. These are called variable expenses. The categories I know I have to have money set aside for every month are groceries, gas, Raelee, me time, beauty, savings and miscellaneous. Your categories may be the same or different and can be anything that you know you need or want to budget for that month! Now, let's get into WHY this method has helped me and might help you also.
1. It's no secret that I like to spend money. Well, I like to get things with my money, not necessarily spend it. When I exclusively used my debit card it was impossible to keep track of what money I was spending when I would swipe it. I might be at Target to buy toilet paper but I walked out with new cleaning supplies, clothes for my daughter, a new purse, granola bars and a new lipstick. So when I planned in my head that I was going in to spend a certain amount but coming out with more, then I'm dipping into money that was designated for other things like groceries or gas. But you don't know that until you've already spent it and then it's the 15th and you have two weeks to make $12 last in your gas tank. That was my life eeeeevery time I got paid, so that is the primary reason I now have to physically separate my money.
2. Security. Something you may have a hard time wrapping your head around is how to feel comfortable with your checking account balance being lower than you're used to. I still have to remind myself that even though I only have X amount in my account, all my necessities are taken care of and safe because I've set aside the exact amount I will need in my envelopes. It's extremely psychological. You can't expect to retrain your brain into thinking a different way in a week or a month or even a year. Like I said, I've been using this method for around 3 years and I still have to reassure myself sometimes that "I have enough money." You can rest assured that if you've separated your necessary expenses in your envelopes that you won't accidentally spend it somewhere else and you won't have to scrounge up change at the end of the month to get a coffee with a friend because you've already budgeted everything you may need.
3. No surprises. Of course there may be some months that random things come up that you hadn't budgeted for. That's life. But what I love about this method is you can even budget for when those things happen! I keep a cushion in my checking account at all times of around $100 in case I need to use my card somewhere I couldn't use cash or had to spend a bit more than I had budgeted (I was already doing this, but it's a method The Budget Mom uses also!). I also use my miscellaneous envelope for unplanned expenses like running out of laundry detergent that you hadn't budgeted for.. or your kid brings home a flier for a school t-shirt they really want and you have to turn the money in by Friday. Again, going back to security, having those little tricks for unexpected expenses helps me not have anxiety about what's to come.
4. I'm in charge. Going back to this being super psychological, I really enjoy dictating where my money goes. My willpower no longer decides how much I'm going to save that month or what I'm going to spend at Ulta. I decide on an amount at the beginning of the month or whenever I get paid, and that's what I have to stick with. So in those times when you feel weak or forget how much you wanted to spend, the work has already been done and you are in control. Your money goes where you tell it to go!
5. Cash comes in handy. So many people say "Oh I never have cash." or "I never carry cash." This is because they just use their debit card all the time. Well, have you ever realized sometimes it's nice to have cash on hand like when you go to a high school sports event and you need $6 to get in? Or you realize in the drop off line it's popcorn day at school and your kid needs at least $3 to get popcorn, a drink, cotton candy and a pixie stick? These are times your debit card will do nothing for you. So cash can be extremely handy! Also, I've found it is MUCH easier for me to set aside money for savings in cash. It's something about not having to watch my overall balance go down because I'm taking some money away to save.. and it feels GOOD to have that money in your hand and put it somewhere. It's hard to explain, but it's true. Then once you have a good little nest egg saved up, being able to count it by hand and feel it makes it seem like your goals are coming to fruition more than just looking at a balance in your account.
So there are my top 5 reasons I think this method rocks. Hopefully this motivates you a little bit or helped you understand what it's all about. There are several ways to organize your cash, including physical envelopes, but I actually use a small accordion coupon organizer myself. A friend let me in on this little tip back when I started this method and it's definitely one of the easiest and cheapest ways to get started. There are some really cool special cash envelope wallets on Etsy, Amazon, etc but they're usually around $40+ and when you're just starting out and trying to save money, not spend it, getting the super cute wallet isn't really necessary ;).
I'll include a link below for the accordion type of organizer in case you want to try it out!
Coupon Organizer
