the cash envelope system

the cash envelope system

Posted on 23. Jul, 2009 by racine in penny pinchin'

Who knew budgeting could be so easy?  All you need is cash, something to write with and several envelopes.  No, this isn’t some strange math project, but a practical method to manage your money.  The notion behind this budgeting tactic is that you can only budget what you can see.  When swiping your debit card, you can often loose track of your intended budget and spend over your original allotted amount.

Give the cash envelope system a try.  It’s easy!  Simply do the following steps at the beginning of each pay period:

  1. Mark the outside of each envelope with the name of the budget category, for example: rent, groceries, entertainment, etc.
  2. Take the required amount of money out of the bank and place the budgeted amount for each category in its appropriate envelope.
  3. Spend only the money in that envelope for a particular category. 
  4. Repeat steps when a new pay period begins.

Check out daveramsey.com for more information about the cash envelope system and let us know what you think.  Has this budgeting method worked for you?  Leave a comment below and let us know other budgeting tips!

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5 Responses to “the cash envelope system”

  1. Dara

    24. Jul, 2009

    Great post! I’ve heard wonderful things about the envelope system. One of my friends said she had an extra $300 at the end of her paycheck the first time she used it!! Now…if I can only get it together so I can do this.

  2. Luke

    27. Jul, 2009

    You should check out NeoBudget. It’s an online envelope budget system.

  3. Racine

    27. Jul, 2009

    Thanks Luke! I took a look at the sight and this looks great! I think I’m going to sign-up for the free trial and see how it works for me.

    :)

  4. Carmen

    29. Jul, 2009

    I use a coupon organizer that you get from the dollar store or stores like Target as my envelope system. It has about 8 different compartments and I have a label on each. It’s so much easier and cheaper than actually using separate envelopes.

  5. Racine

    29. Jul, 2009

    That’s a great idea and very practical Carmen. Thanks for the comment!

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