I am so stoked to write this post about one of my new favorite things…Cash Envelopes! The idea of cash envelopes have been around for some time, but it is new for me! This has been a game changer for my finances. Let me tell you why I decided to use cash envelopes.
I have been putting out a ton of cash lately. Whether it is school tuition, bills, competition dance (don’t even get me started) or unexpected expenses that have popped out, my finances have been taking a hit! I came across The Budget Mom on Instagram and if you haven’t heard of her please run to her site because she is amazing! She has paid off over $77,000 in debt and is inspiring and motivating women to take control of their finances.
One of the first steps in creating a budget is to determine where your money goes. I printed out my bank statement and line by line I highlighted and grouped my expenses. I was appalled when I realized I spent over $400 in eating out in one month! This $400 was not from fine dining mind you. I only ate at one restaurant for my birthday lunch and it was $55! So, the rest were small purchases that added up to big money! I needed to get control over my finances, and the break the habit of using my debit card mindlessly. I am a visual person and the cash envelopes was the perfect choice for me. Actually, pulling out the cash kept me mindful of what exactly I was spending.
Here were the steps I took in creating the envelopes:
- I paid all the bills I had to pay from my first paycheck.
- Based on the spending from my bank account I took out cash and allotted it into categories, such as Grocery, Eating Out, Gas, Miscellaneous, Fun, and Dog.
- I used an envelope template from The Budget Mom and traced it onto some scrapbook paper I bought for 79 cents from Michaels to make the envelopes you see above.
- I added a ledger in the envelope, which is simply an index card where I recorded how much I spent, the date, and balance.
The result was I did not touch my debit card for 2 weeks! I was so much more conscientious of how I used my money. I was also less stressed about my finances and tucked away $130 in savings. If you are struggling with your finances, try using cash envelopes as a step toward understanding what you’re spending and getting more control over your budget.
Also, get the family onboard! This month when I took the cash out I had my daughter count the money and put them into envelopes. Last month, she was like, “mom please do not pull out those envelopes,” this month she found $2 in her room and told me to put it in the fun budget! Building good habits start early and this is a fun way to get kids involved!
In two weeks, I’ll share more with you about how the cash envelopes are working and share some of my finance goals with you. I love getting on the road to financial freedom!