Wednesday, March 12, 2008

Keeping Envelopes Handy with a Cash Budget


Greg and I jumped on the Dave Ramsey band wagon a few months after being married. We quickly paid off all our debts began an emergency fund and have since than been a little fanatical about our finances and keeping a tight budget. Our budget has changed over the years and we seem to always tinker with it. We first started out with an all cash budget using envelopes, we had an envelope for gas, groceries, clothes, entertainment, you name it we had an envelope for it. We've learned to simplify things a bit since those first few months. It's not real convenient to carry envelopes of cash around and we always felt uncomfortable having a month's worth of cash sitting in my purse. Once we tried forgoing using cash, but realized it was harder to stay on budget. After examining things we realized the two categories that seemed to be overspent if left unchecked were groceries and entertainment. Now we only take out cash for those two things, once the cash is gone it's gone. This method has simplified our budget, we stay on track and we don't hassle with too much cash.
I like to keep the two envelopes on the fridge and take out only the cash I need. With the envelopes in a permanent spot I never worry about where I put the money last. I also store the month's receipts in the envelopes. It's the best of both worlds-the restriction of cash where needed and the convenience of a debit card for all else. It works for us.

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5 comments:

MomOnTheGo said...

The central location is a good idea - the time we spend looking for things has its cost. I can imagine the discussion with my 3 year old over why she can't tough the "monies" for the first while but it would be good to talk about money and how to spend it at her level.

Jennifer said...

Wonderful Idea keeping it on the fridge! Def saves time looking for it:)

Jen said...

I have heard of this method many times and didn't know if I had the discipline to carry it out. This sounds very manageable and I think we have similar spending areas that need to stay in check.

The (Almost) Amazing Mammarino said...

Great idea! I was researching this very thing tonight and worried about carrying all the cash around. Good solutions.

Toni said...

Wow!This is a great tip!Thanks for sharing it:)