Sunday, February 20, 2011
The Cash Envelope Savings System
February 21, 2010
Today, I'm going to share with you a savings system that I have been reading about called the "cash envelope saving system". I first read about this in one my magazines a couple of years ago, and have seen random articles about it since. I decided to do a little research about this savings system and have decided to give it a try!
Evidently, according to the internet research that I've done on this, the cash envelope system goes back to your grandma's time, to when money was put in an envelope or envelopes to budget out the cash from payday to payday. That is how our grandmas kept enough money going from one pay period to the next. I can actually remember my grandma keeping an envelope of money in her purse. The philosophy of the envelope system is that if you are actually using "cash" and not a plastic bank card or credit card, that you are more apt to spend less. Evidently seeing the actual cash leaving your hands helps you save rather than using plastic, in which you don't see your hard earned cash leaving your hands.
With this system you are to label envelopes with each of your monthly bill titles, putting the amount of cash in each envelope with which to pay each bill. There are various ways to do this, and in just a minute I will be giving you some websites that I have researched that explain this system more in depth. For my use, instead of using envelopes, I went to the Dollar Tree at the mall and purchased a coupon organzier for a dollar. I'm going to label my cash categories with the titles "groceries/household", "eating out", "entertainment", "gifts",and "clothing" as well as a few other categories. If I put a few bucks into the clothing envelope each payday, then I've saved a bit of cash for new clothes for my family, instead of reaching for the plastic card each time we see something we like. If I set aside X amount of dollars each week for eating out, this will help me to keep track of the "eating out" budget. Each week, I will put an allotted amount of cash into each category. Once the money is gone from that particular envelope (or in my case the file inside the coupon organizer), my budget has been reached and I cannot spend more in that category for that week. I will continue to pay my regular bills online, but for everyday purchases where I normally reach for my bank card, I will use this cash system. I'm going to give it a try and hopefully, I will save by realizing I am using my cash, (not plastic), and seeing that, "Hey, I only have $20 or whatever left in this category to spend and I've got to be cautious and prioritize what I spend."
In order to do this blog entry justice, let me list some websites below, which you can visit to learn more in depth about this money management system. These websites will give you different scenarios on how to budget out your cash envelopes depending upon how you get paid, whether weekly, biweekly, or monthly. The websites will also give you suggestions of category lists and scenarios. You can copy and paste any of the following sites for additonal information:
I hope that this entry has been beneficial. And whether you coupon or not, if you have a cash category for groceries, you know that you HAVE to stay within your budget by allotting a certain amount of cash a week for groceries. And if you eat out weekly, if you predetermine that you don't want to go over X amount of dollars in eating out, put that amount of cash into your "eating out" budget envelope. And with the "gift" envelope category, if you put a few bucks in that envelope weekly, then when it comes to family birthdays or birthday parties that your children attend, you have a little stash waiting for you in your "gifts" cash envelope. You could even create a Christmas gift envelope to occaisionally put a few bucks in each time you get paid.
Good luck! Hopefully I will have some luck with my budgeting envelopes and you will too!
P.S. Refer to my other blog entry titles, in case there is an entry that you missed reading.