Is it hard for you to stick to a budget?
Are you constantly checking your account to see how much money is left until payday?
Do you spend money you don’t have?
If you answered yes to any of these questions, the cash budget system is going to change your life. Using cash for variable expenses – things like groceries, personal spending money and vacations – makes it impossible to overspend. (As long as you’re following the system.)
Before using cash, Mr. Right and I bought most items with our debit card. Even today, I don’t like using cards for a couple of reasons:
- It’s easy to overspend. Who hasn’t been at the store and thought, “Well I’ll figure out how to cover it later?”
- It’s easy to forget what you spend. You might overdraft your account or forget about a purchase until late in the month.
- Your account could be hacked. This recently happened to us, which was annoying. Cash can’t be hacked.
How the cash budget system works
- Personal spending money for myself, Mr. Right and the kids
- Eating out
How much cash goes into each envelope?
Figuring out the cash
- Open the budget file (ours is a simple excel spreadsheet). This helps me remember which cash envelope I’m on for the next steps.
- On scrap paper, write the numbers: 50, 20, 10, 5 and 1 down the left side.
- Make tally marks on scrap paper for each amount. (If I need $320 for groceries, there will be 6 tally marks by “50″ and 1 tally mark by “20.”) Continue to tally for each cash budget expense.
- Give teller my scrap paper when I withdraw funds and ask for the money back in those amounts.
- Divvy up the cash into envelopes.
How to remember to take your cash
Try it: Commit to cash as a couple
Have you tried the cash budget system?
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Photo by Adam Holtrop