How To Start The Cash Envelope System

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Allow me to take you back in time… Not too far, just a few months. Lets start right at the beginning of the year. As most people do, I set a couple goals for myself and my family for 2019. Among those goals was having at least $1,000 in savings. That was it, just $1,000. I wasn’t even sure if we could manage that. To sum up a long torrid affair with over spending and not thinking straight when it came to money, we haven’t been able to save up much of anything since having kids. Kids are expensive, you go broke in ways you never really realize when you grow your family. The way we handled and thought about money before becoming a larger family no longer worked for us. We just thought we were broke. That was all there was to it. But as we would make changes and change jobs and get raises, we continued to find ourselves just as broke as the year before. We couldn’t figure it out. Even though more money was coming into the house, we seemed to feel no changes in the financial boat. More money coming in always seemed to equal more bills, or finally being able to catch up on things that had to be neglected when we were broke, we kept giving money lies and believing every single one of them.

We tried a few times over the last few years to implement the cash envelope system and the first two tries failed. Like, really failed. The first time around I didn’t even tell my family, I just tried taking out cash for some sinking funds and keeping them out of sight. But since I didn’t communicate it with my family, the spending trends continued on just as before and, in less than a month, I gave up. Last spring we tried it as a family, we used actual envelopes, and, I can’t even begin to tell you how many envelopes we used in our first week. It had to have been at least 15 envelopes! And for some reason we had them in weird increments, like a 5 for this, 10 for that 15 for something else. As you go along you might find that useful, but for a first go around it gets so complicated that we, once again, just gave up.

By March of this year I had had enough. I was pissed off and tired from arguing about money, I wasn’t understanding how everything looked so great on paper, but when actually going day by day with out budget it just wasn’t working out to where we had even $20 to stick into savings. Something had to change. Seriously change. We have goals, and honestly, most of them shouldn’t feel as out of reach as they did at the time. So we went back to the drawing board, we got serious and we got real with each other (in a kind way). We’re now on month 3 of using the cash envelope system, we’re able to save money every month, and we are really starting to see where our money goes!

How to start the cash system (1)

Here are my tips for starting a cash system that will work!

  1. Don’t over complicate it. When we tried this method last year, we had just too many categories. We had a clothes category, my husband had a beer category, a fishing category, I had a category for each hobby, we had one for food, one for non food items, this that and the other thing. It quickly became too much work to a. go in and take out the money in the exact increments I needed, and b. Actually sort those increments in to the right category. Now we have four categories: Groceries, fun spending, boys (kind of like an allowance), and extra/eating out. We have all the budgets set up into increments of $20, and we split the fun money between my husband and I. I can get this money out right at the ATM since I want all $20’s and it take less than a minute to sort into my categories. Easy Peasy.
  2. Know and expect to fail along the way. I’m on my third attempt (first successful attempt) and I know I probably could have done this all along if I hadn’t given up each of the other times I tried. This time around we have had fails, we’ve had things that we thought would work in March that we don’t do now in May (like using cash for gas, when we usually like to just pay at the pump). Be willing to really look at the fails and see where you can make changes and then try try again!
  3. Watch your savings grow! Its awesome momentum! That $1,000 goal I had back in January? I met it in my first month of using this budget! You can record the amount you have in savings at the start of the month and then again at the end of the month, write a blip about what came up during the month that held you from your goal, or just gladly watch that amount start to really grow!
  4. Give yourself a small incentive. We have also done bigger incentives. But give yourself a goal that you want to save for. The first month My husband bought a smoker (bigger incentive) right now he’s saving up for his hunting trip. My goal by the end of this month is to fully pay off our Best Buy card before the interest hits in June from purchasing our stove and fridge.
  5. Know what you’re saving toward. Were you too afraid to really make something you wanted to do your goal? “I really would love to take the kids to Disney, but there’s no way I’ll have the kind of money.” “I would love to buy a new vehicle with cash, but that’s just impossible!” Now that you’re able to save up a little money, have some goals in mind so that you know what you’re saving toward.
  6. Reassess every single month. Once you get it all put together and know what you want your categories to be and for how much, reassessing it each month doesn’t take too long. You might just look it over quick and think, “Yep, it’s still working.” or, you’ll know that you need to make a couple adjustments, “I keep going over on my grocery bill, I need to make a little room to stock up on some things to help cut spending later,” or, “I’m almost ready to buy a house I just need a little more money saved up, where can I cut some spending to make this happen sooner.” It could also be, “I use my debit card every time I get gas, I think I’ll cut that out of the cash budget since I don’t really go over my amount, and I don’t need the cash for it.” Go through and make sure the shoe is still fitting.
  7. Slowly work the numbers down each month. Lets say you want to spend only $500/month on groceries for your family. But the last few months you’ve been spending closer to $800/month. Slowly take that $800 and cut back a little each month to help you really see what you should be spending on groceries. This is also why reassessing is important. If you’re always under or over on an amount, then you can clearly see where you can start cutting back and making the numbers you hope to use really work for you.
  8. STICK WITH IT! Don’t just try it once and then think it didn’t work for you. You really need to try it over a couple months to give it a chance to work for you!

Want to know how to set up the budget needed to figure out your numbers for the cash system? Click here.

Want tips on how to save on your meal plan and in the grocery store? Click here.

Have more questions about budgets, running the home, or keeping some money in your savings account? Leave a comment below or ask me on social media!

Until Next Time Friends!


How to start the cash system

How to start the cash system (1)

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