The cash envelope system? Any fans?

[crazydoglady]

Hi all, I'm a newbie here. I read a post below about the 'cash envelope system'. I think I have an idea of what this is, but if someone could describe it to me in detail and point me in the right direction of getting started on it, I would be very grateful! I am currently working to pay off some credit card debt as well as a few small debts here & there so that I can get started on saving for home renovations & DIY projects I'm dying to do. This envelope system seems to work great for so many, I thought I'd look into it. Thanks!

[briank]

I considered doing this, but I'm pretty good at sticking to my budget, and since my paycheck is direct-deposited and I do some "pay yourself first" stuff (IRA, savings, etc) I think withdrawing the cash and using an envelope would be more trouble than it's worth in my case.

[Anne]

Similar to BrianK, my spending is uncomplicated enough that I just withdraw a small amount of cash (under $100) at the beginning of the week and that has to last me all week for groceries, lunches, going out, and any other little expenses that come up. So far, I've been very successful doing this. If I had a family though, I can see how the envelope system would make it really easy to make sure the family as a whole sticks to the budget.

[Kathryn]

Actually, I'm hoping someone can also explain to me how the details of this system work in actual practice, especially if you're talking actual cold hard cash in physical envelopes. Do you take the envelopes with you when you go shopping? I'd feel pretty queasy walking around with the $500 grocery budget in my purse for very long. If you're at Wal-Mart and buy $123.67 worth of home decor items, $17.43 worth of groceries, $34.12 worth of clothing, and a $29.99 gift for little Suzie, how on earth do you do the accounting? Do you make up separate envelopes for each adult in the household?

[Livingalmostlarge]

I've tried this for 2 months. My biggest gripe and problem is being motivated to track where the money goes. I hate spending cash, so I rarely buy stuff, spent $50 on eating out and $50 on groceries. But I don't know where? Or how much at each store.

Does anyone else have this problem? Where they can't recall where they spent the money?

[ajeh]

Hello Everyone,

I'm a newbie here at Wise Bread and this is the first I've ever heard of the envelope system. I'm a college student with low funds but it sounds like something I'd be willing to try so that I can stay on track.

[USCGamecocks]

Great story. I haven't used it. Seems that i work in the opposite. Cash on me spends easier than money in the bank. I'll try it on a smaller scale though.

[reyn74]

Originally Posted by Kathryn

Actually, I'm hoping someone can also explain to me how the details of this system work in actual practice, especially if you're talking actual cold hard cash in physical envelopes. Do you take the envelopes with you when you go shopping? I'd feel pretty queasy walking around with the $500 grocery budget in my purse for very long. If you're at Wal-Mart and buy $123.67 worth of home decor items, $17.43 worth of groceries, $34.12 worth of clothing, and a $29.99 gift for little Suzie, how on earth do you do the accounting? Do you make up separate envelopes for each adult in the household?

We've done the envelope system for a few years now. Every month I add up the cash we need to take out of the bank, and take it out over the period of a couple days and fund all my envelopes. I have grocery, restaurants, pet supplies, gifts, play money, kids allowance, sometimes clothes (but sometimes I buy online). My grocery fund includes household items. The larger of the envelopes gets funded every two weeks, so they never have a lot of cash in them. If I'm going to Walmart for groceries and I have $300 in the envelope, I might only take $150 and leave the rest at home, since I shouldn't be spending more than $150 per week anyway. I don't worry about carrying cash around, because no ones knows I have cash. I do make certain that my purse is with me at all times, and not in the cart when I could turn my back for second, but I'd do that anyway. Occasionally I'll buy something for the pets or a gift, and in that case I'll just take the money out of the grocery envelope to pay, and pay the envelope back when I get home.

The only envelopes we keep for separate adults is our play money. DH and I each get an 'allowance' but in reality, we just put that money in our wallets, and don't carry it around in envelopes. Otherwise the envelopes stay in a drawer at home and whomever is planning to go to the store takes the appropriate envelope. Every so often we'll forget and decide to go somewhere spur of the moment, and then we'll usually pay with debit card and come home and take the money out of the envelope to go back to the bank. In our case, we actually keep it in a holding envelope for the next pay period, and then take out less when we fund, because we can't actually put cash into our bank (USAA).

I hope this makes some sense!

[cigood]

I'm a big fan of the envelopes system too. It has helped us become ready for all those annoying bills that seem to pop up from time to time, but that we weren't counting on (misc. medical, car tags, gifts for family, etc.)

We don't use cash (I'm too worried that I'll loose it or it will get stolen). We use our credit cards so we can get those great points. We use a software program called IntelliPenny to help track it all.

[spencer]

I've tried doing something similar once, but it was a real pain to carry all this cash around, so I stopped doing it...