The Simple Pen

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Build a Better Budget Part 5: 5 Ways to Make Cash Envelopes Work for You

We’ve been talking about budgets for a while now. So far in our Build a Better Budget series, we’ve talked a little bit about why we even bother creating a budget, about how the budget is more of a seat belt than a shackle, about the budget being a great communication tool, and about the nuts & bolts of budgeting. I hope that our conversations have gotten you thinking about the possibility of creating your family budget. Be sure to sign up for my free email updates or for my RSS feed so that you don’t miss out on any of the conversation.

One of the ways we’ve made our budget work more smoothly is by budgeting cash for certain items. We keep this cash separated in envelopes by spending category. We started off doing this using Dave Ramsey’s envelope system. It’s a wallet-style system with paper envelopes inside. Every time we get paid, we place the budgeted amount into each envelope. Then, when it’s time to shop, we use the cash from the envelopes. It’s very easy to see exactly how much is left in each category at any given time.

Being a die-hard debit card user, the cash envelopes took some getting used to. I’ve had to be more careful at the grocery store. If I don’t keep track of what’s in my cart, I could end up short on cash at the register! Now that’s motivation to pay attention! My old way of shopping was to get a reasonable amount of groceries and pay with the debit card. However, it seemed like I was always going slightly over our budget. Using envelopes has helped me stay within the budget that we’ve set.

As I’ve been using cash envelopes, I’ve found several things that we can do to make them work for us.

  1. Fill the envelopes right away.
    If I don’t remember to stop by the bank to get the cash on pay day, I tend to put it off for a week. That means that we end up using our debit card, and I have to go back and figure out what should truly be in the envelopes by the start of the next week. It’s not pretty, folks! Now I make it a priority to get the cash on pay day and immediately fill the envelopes.
  2. Limit the envelope categories.
    My husband was starting to think that we would have a cash envelope for everything down to dog food! But I was able to limit us to just five categories: Groceries/Personal Care, Clothing, Prescriptions, Gifts, and Miscellaneous. Most of the other items in our budget are paid through our online bill pay system or by check. (Many people keep their gas money in an envelope too. We’ve chosen to keep our gas budget money in our checking account so that we can pay at the pump. It’s too cumbersome to get Emma out of the car, go inside to pay, and then buckle her back in before pumping gas.)
  3. Avoid borrowing among envelopes.
    Is the grocery envelope looking a little lean? “Borrowing” from other envelopes is oh-so tempting! But borrowing $20 from the clothing envelope isn’t the answer. That will just cause problems when it’s time to buy clothes. Instead, I’ve found it best for us to re-evaluate each envelope from time to time. Maybe life’s been a little hectic and the grocery budget needs to adjust to meet the demands for a few weeks.
  4. Pace yourself.
    It’s very tempting to spend more right after I fill up our envelopes. And why not? They’re full of cash just waiting to be spent! I’m learning to pace myself so that the cash lasts through the two weeks or month that it needs to span.
  5. Budget our goals.
    When we were trying to decide how much money to put in our grocery/personal care envelope, we knew that were spending a little over $70 per week on these items. Our goal is to spend $60 or less, but we’re not always there. Right now we’re putting $70 per week in and trying to spend less than that.  Once my work schedule calms down a bit, we’ll probably just put our $60 per week goal amount in there.
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Comments

  1. I have seen these wallets out and about on a few websites and they look like a dream! Man, how much easier couponing/checking out could become with this. I would LOVE to win!

  2. I’m so glad you wrote this post! I try to use envelopes (real paper ones), but I often get lazy. And, since I’m the one with the envelopes in my purse, my husband uses the debit card instead. It can get a bit confusing. I use Crown Financial Envelope software to keep everything under some control. It is extremely helpful! Still, this has made me want to be more intentional about using cash. This was just what I needed to get me back on track! Thanks!

  3. I don’t currently use the envelope system, I was sort of afraid I would lose the envelopes or something. This would be a great way to try it out!

  4. I still haven’t started a budget, but I’d really like to start. Maybe a fancy new wallet would help motivate me.

  5. I’ve been wanting to try the cash envelope system – this would give me incentive! Nice giveaway – thanks!

  6. I would love to win one of these wallets. We just started back this month to using the envelope system. We plain and simple got lazy and started using the debit card again. Big mistake. The cash envelope system truly works. When the money is gone the money is gone. It really keeps spending in line.

  7. We don’t use the envelope system yet, but are moving in that direction. This walllet seems like a very nice solution.

  8. Having worked with Jennifer for the past three years I have learned a great deal about couponing. The wallet would really help me get my coupons in order and make my shopping easier.

  9. This wallet would be good for the cash system or even scrip cards (gift cards for local mercants)which my grandkids school sell to help out the school budget. I try to keep them in one small makeup bag in alphabetical order. This way, I could divide them down into smaller groups.

  10. We do not currently use the envelope system. In the past we did so for gas and entertainment.

  12. I do not use the envelope system but I think I want to start. I’d definitely have to do it on a trial basis though to see how much I can actually save; my husband would have to see the facts before he would commit to switching.

  13. I haven’t tried the envelope system yet, mostly because I try to use my credit card for everything (earning points and paying off monthly). My tip would be to make sure to keep good records, don’t let it get away from you–it stinks to have to file 8 months worth of papers at once (which I’ll be doing this holiday weekend!).

    Thanks for the chance to win!

    –Liza

    ejm6x (at) yahoo (dot) com

  14. I currently do not use this system but it sounds like a really great idea, I’d love to give it a try. Thanks for this terrific giveaway.

  18. For convenience (and the rewards), we’ve used our cc for most purchases the last several years. I’ve been rethinking that, however, since our payment got lost in the mail and ended up costing us interest and late fees.

    This looks like a great tool to use to make the break. Thanks for the giveaway!

  20. We’ve started using the envelope system with our spending money each month. It’s really helped keep our “fun” spending in check. It is a really great way to manage those spending categories that tend to get out of control!

  21. We used the cash envelope system for a while. Unfortunately we were not very disciplined with it. Maybe our budgeted amounts are unrealistic? We recently started going to using a credit card and paying it off each month since we were tired of dealing with the envelopes. I would love this wallet so I could give the cash system a try again. Thank!

  22. Hi! I would love to win one of these wallets. I have to keep money separated to buy things for my mother, my grandmother because they are always needing items that they can’t find in their town. I love the idea of separating $$$ in envelopes. Thanks for the opportunity to win this. 🙂

  23. i dont use the envelope system, but i am thinking of looking into it now!

  26. Would love to win. I’m really thinking about using this cash system for our budget.

  30. this is awesome! right now i have a small accordion file thing but kind of big and bulky

  32. I don’t use that system of budgeting, but have a computer program I downloaded. I could use a wallet though…right now everything is flying around my purse!!

  33. This is a very smart invention!! I have a small file for my coupons (some stored in my wallet and a seperate file for all my budgeting papers/forms). Thanks for the chance to win!

  34. We are huge fans of the DR envelope system. BUT I must say the design is not my favorite, so I would LOVE LOVE LOVE to try something new!!! Thanks for having a great give-away!!

  39. I just started using the envelope system with my food budget. It has worked out so well, that I will now be expanding it to clothing.

  43. I just started using the envelope system and love reading more about it with what works and what doesn’t.

  46. Re: Let me know if you use the envelope system of budgeting or if you don’t. You can also leave a tip that helps you make it work for you.
    We have used the Dave Ramsey envelope wallet for our budget and it has helped us. But I agree, I would love to have one ‘wallet’ that holds all.

  48. Re: giveaway…If you’re already a subscriber, leave a comment letting me know.
    I am already subscribed.

  49. Re: Come back and leave a comment letting me know that you became a follower. I am now following you on Twitter.

  50. I use the envelope system and love it. My biggest piece of advice is to Do Not Cheat – as hard as it is – this is the number 1 rule.

  52. I do not use the wallet system, but seems like something I should do! And what a perfect way to start! Love it, thanks!

  54. I don’t use the envelope system, but I would love to win the wallet. It sounds like something I could really use!

  56. We are working toward the envelope system, because you are correct–it is so easy to budge too easily on budget with our debit card. I am working on my husband to feel comfortable with envelopes!

  60. My husband & I use an envelope system that is a modification of the Dave ramsey plan. Its great, but you’re right, the envelopes can be so frustrating in a hurry and my purse always seems so heavy with two wallets!!!

  61. I haven’t tried cash envelopes yet, but I have been considering it. We’re still at the tracking our spending phase, trying to work out our budget, but its slow going since we just moved, and ended up with all kinds of extra expenses. Hopefully June will be more straightforward!

  65. thanks for the budget tips. i am a subscriber to the daily email. please enter me in the contest for the free savvy cents wallet.

    thanks,
    carol hensley

  66. We don’t use the envelope system but we are constant coupon users. If soda is not on sale we don’t buy it. If broccoli is only a dollar with coupon, guess we’re eating broccoli all week. It saves money and adds variety to our lives 😉

  67. I use the cash envelope system for things I have a strick budget for (food, gas,eat-out)The system works but the envelopes well not so much. Paper just doen’t hold up and there has been times I grabed the wrong envelope

  69. We haven’t tried the envelope system yet (thinking about it) but I’d love to win this for my BFF who recently went to an envelope system–I’m sure she’d love it. Thanks!

  73. i cant twit with my phone but i do tell everyone about the wonderful things you do for us money saving folks!! thanks for your hard work

  75. I don’t use a budget envelope system but I do want to!! This would make it soo easy. THanks for the giveaway.

  76. well i DON’T use an envelope system. i would end up cheating. i am no good at setting goals for myself and actually sticking to them. i’m pretty good at justifying things unfortunately…

  77. I don’t use a budget envelope system but this one sounds really interesting!
    Please enter me in!

    ksyshenka(at)yahoo(dot)com

  79. we just started the envelope system. it is hard at first but we have gotten better at planning. my envelopes are paper currently. they keep ripping would love to use this wallet.

  80. already subscribe to your awesome email, i wait for it daily. thank you for all your hard work. it is greatly appreciated.

  82. I’d LOVE LOVE LOVE to try this wallet, looks really nicely made and great size!!

  83. I would LOVE to win this. I do use the envelope system, but like you said, the paper does not last that long. This would be great, and it is pretty too!!

  84. We’ve just started using the cash envelope system. I’m not sure how it will work with my sum what bulky envlopes but I have high hopes for major savings! Our newest budget and determination all starts today! nothing like a new month to get the budget going!!

  85. I use the envelope method for certain things, too. Sometimes it’s just good to know you’re not constantly whipping out your debit and/or credit card to pay for things.

    I find it helps to only carry one card on me, if I’m going with cash for something. For some reason that helps to resist the temptation go over budget and think “Oh, I’ll just put it on the card”. I could NOT carry one, but really – what if there was an emergency?

    Thanks for finding something better than the dratted paper envelopes!

  86. I used to use the envelope system until I got a little ( ok, a lot ) lazy with it. And because of that, our budget is in really bad shape. Thanks for the review and give away.

  89. Oooh! Pick me, pick me! We just finished the Dave Ramsey class and we are using the envelope system. My girlfriend has this wallet and it is on my wish list!! This is an excellent class for all to take

  90. My husband and I use the envelope system from dave Ramsey….yea…we just graduated and could certainly use the savvycents wallet, which is much sturdier. My DR system is already tearing and falling apart! Thanks for the chance

  91. I currently am subscribed to receive your daily emails and I am in love with all the great deals and advice. Thank you so much!

  92. i haven’t tried the envelope system yet, i’m worried that the envelopes will look like trash in my purse & get thrown away! i’d love to win one of these wallets, please 🙂

  93. I have not made the LEAP yet. I think this wallet might give me the push I need.

  94. I need this wallet in my life. I currently have envelopes and 2 wallets which makes my bag weigh a ton. LOL

    P.S. I became a google friend also.

  98. I am getting ready to start trying this method! Would love to start off on the right foot!

  103. I do not currently use the envelope system, but my Mom has been after me for years to try it. I really want to try it, maybe if I win this it will make me more motivated. Great website, love it!

  114. we just started dave ramsey tmm so this would be awesome. fan on facebook and receive email already. thank you for all your hard work.

  117. I have been trying to find a wallet exactly like the SavvyCents one so that I only need to carry one thing, instead of a wallet and cash envelopes. It looks like it would be perfect!

  118. I haven’t used the envelope system yet but it definitely sounds like something I need to do. I’ve always used credit cards for everything so I really haven’t paid much attention to where the money goes, I just know I’m spending more than I should. Now that I am out of work and we have a baby on the way I need to get a plan in place and the envelope system sounds like the right way to go for our family.

  121. i really reallly would love to win this, my now defunctioning binder is gonna have to be replaced…bad!!! shape im telling ya..
    i love your page, i am an avid reader, i blog about you on several posts..thanks jennifer, you do a great job

  122. oh oh i forgot to post it…i got some of my friends to become friends and i linked it with my facebook…now i get updates 2 ways..yeah

  123. I love the Dave Ramsey system of paying down debt. However, I have NOT adopted his envelope method. That being said, I do use envelopes for my coupons. One for each store. They are terribly battered and taped.

    Your post has inspired me to to bite the bullet and make use of the envelopes for cash and shopping. It will take discipline on my part. But I’ve already demonstrated I can use an envelope system with my coupons. It shouldn’t be too hard and it will really help us out!

    Thanks for your post and chance for this offer!

  129. I love this idea and we use the envelope system… I am fan on facebook. Thanks!

  130. We used the envelope system for a long time. Now we’re under control and have reached Dave’s goals so discipline ourselves without the envelopes. So far so good. This is great and would go to my son and daughter-in-law who are envelope system devotees.