It isn’t often that I give up when I’ve set my mind to accomplish something, but I confess that I’m a dropout of the envelope system.
What is the envelope system?
The envelope system is a way to ensure that a family sticks to their budget. Upon determining the budget amounts for the month, the money alloted to each category is placed inside an envelope with the category name written on the outside.
For example, you might put $500 in the “food” envelope for groceries, $200 in the “gas” envelope (check out my tips for saving on auto expenses), and $100 in “entertainment”. As each expense is incurred, the money is taken out of the appropriate envelope and paid to the vendor.
When an envelope is empty, the spending in that category is done for the month.
What are the benefits of the envelope system?
- It’s easy to start: make a budget, label envelopes with each category, and fill each envelope.
- It’s easy to implement: bring your envelopes with you when you shop and withdraw money from the applicable envelope to pay your bill.
- It’s easy to stick to your budget: when the money is gone, spending stops. Period. This is the absolute best part of the system and why it works so well. No other budget tracking enables such simple curbing of overspending.
Why I don’t use the envelope system.
We purchased one of the many envelope system products available, although you can also just use plain envelopes and a rubber band to keep them all together.
After leaving the wallet (containing several hundred dollars) in a store, I nearly hyperventilated.
Guess what happened? …I lost the wallet again.
I’m normally a responsible person, really! Thankfully, each time we recovered the cash.
After that experience we wisely determined that my mommy brain and the cash envelope system don’t mix. It’s not worth saving money on overspending only to lose much more in the process.
I still have a special place in my heart for the envelope system. It’s an amazing tool. I believe that every family should give the cash system a try. Even with temporary use, you’ll reap the mental benefits of closely monitored spending.
Families that are in debt should strongly consider using this helpful tool on a regular basis to aid them in their journey to freedom from debt. You won’t find a better tool for digging out of debt than a good budget and a set of cash envelopes.
Have you tried using a cash envelope system? How did it work for you?
This article was shared at Thrifty Thursdays.