Why I am such a big fan of cash envelopes

I am a HUGE fan of cash envelopes because they are a key reason that Jenn and I started winning with our finances.

Here is how we use cash envelopes:

Every month BEFORE the money comes in, Jenn and I work together to spend all of our money on paper.  We FORCE our money to behave by making it follow the INCOME – OUTGO = EXACTLY ZERO formula.  This usually takes less than 20 minutes per month!!!  After we have completed the budget, we figure out how much needs pulled out for the cash envelopes.

How do we decide how much to put in cash envelopes?  Well, it is something that has been developed over time.  We have learned that there are certain categories that we are more likely to impulse on.  These categories are where we are quite likely to overspend if we use the debit card.  As a result, we pull out the amount of cash that we budgeted and put it into a labeled envelope.

Here are some categories that Jenn and I use cash envelopes for (because these are categories we could overspend otherwise):






Think about these categories for a minute.  It is pretty easy to go crazy and overspend these categories isn't it?!  By using cash envelopes, we KNOW FOR SURE that we will NOT overspend.  We will only spend the amount we budgeted!

Guess what?  I have never overspent a cash envelope in 4 years!!!  If I were using a debit card, I can guarantee you that I would have overspent at least 24 of the past 48 months!!!  Why?  The debit card doesn't allow me to keep a running amount of how much I have left to spend for each category.  The cash envelopes? – Yeah, I can just open it up and count.  Presto!  I immediately know how much I have left for the month!

Try it!  If you are nervous, try just one envelope – GROCERIES!!!  It can quite possibly change your life! 


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  2. Chris on August 2, 2008 at 10:16 am

    My wife uses the cash envelope sysyem and loves her fabric envelopes from http://www.crunchycute.com
    Much better than paper…

  3. […] on the wagon, just very busy.  Everything is still going well.  We are still using our cash envelopes  …and loving it!!  We have really gotten the hang of things and luckily we […]

  4. I Was Broke. Now I'm Not! on August 13, 2008 at 7:33 am

    Debt Freedom March – Couple #2 – Month 11…

  5. […] wanted to do.     Everything is going GREAT!!!!  We are still sticking to our cash envelopes and are looking forward to paying off Vehicle 1 […]

  6. […] This one move saved us over $200 a month in groceries alone!  You can read more about how to start with cash envelopes HERE.  […]

  7. John on June 11, 2009 at 6:24 pm

    You guys should totally try http://trypiggybanks.com – its almost as easy as using real envelopes, but I can still use my credit cards and debit cards to keep track of everything… oh, and its free 🙂

  8. JosephSangl.com » Just Make It This Week on January 30, 2011 at 10:44 pm

    […] Not overspending your cash envelopes […]

  9. […] Use cash envelopes […]

  10. […] To read more about why I LOVE cash envelopes check out this post. […]

  11. […] This one move saved us over $200 a month in groceries alone!  You can read more about how to start with cash envelopes HERE. […]

  12. […] utilize cash envelopes for the “impulsive” categories such as groceries, dining out, spending money, […]

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