my cash envelope system

it’s been a while. i know; i got stuck in a writer’s block rut. sometimes i have so many ideas in my head and i can get them “down on paper,” so to speak. and then other times, i have so many ideas in my head, and i just can’t straighten them out enough to get them into a coherent post; they’re all jumbled and pinging around. when that happens, i need to step away and let things settle.

but i’m back now to talk about something that i’ve been really into the past month or so. i am really trying to make 2015 the year i get spending under control. with that in mind, i have moved to a primarily cash envelope system (it’s very popular, try googling cash envelope system to read about how it works). while there are many people who are now 100% cash based i would call myself more 80/20. i still use my credit cards, but i try to pay for as much as i can with cash. (i say all this just as i hit the order button for two new pairs of shoes from zappos…do as i say, not as i do.)

there are some people who are motivated to be more financially responsible by using their credit card for all purchases. the idea of handing over their card to be swiped makes them think twice before making a purchase. there are some who are motivated by using their debit card because it is tied directly to their bank account. and then, there are those that are motivated by the cold hard cash; seeing the cash disappear from your wallet can be a powerful tool for forcing people to think about what they’re actually purchasing. i fall into the last camp.

deciding to purchase and item is easy, handing over the cash to make that purchase happen causes me to seriously consider whether i really need that item or that fancy coffee drink. i hate to see my money be spent on things that end up being duds. now, i’m forced to step back and really think about my purchases, because once the money is gone for a certain category, it’s gone until the next pay period when i withdraw my cash.

as with any new system, there are kinks to work out. since i was starting from scratch, i tried to pick the most common spending categories and estimate a bi-monthly budget. after each pay period before going to the atm to withdraw the next sum, i assess my finances: how much i spent of my budget, where i spent it, could i spend it more efficiently, do i really need to budget this amount for certain categories. for example, the first month, i planned to budget $100 per month for skincare/makeup/haircare products. after my first two withdrawals, i really took a look at that number, and i realized that by budgeting $100 per month for these personal care products, i was telling myself that i was ok spending $1200 a year at sephora. i am not ok with that, so for july, i cut my budget way down; my only beauty purchases should be for replenishing what i finish, not purchasing new items.

so far, after 3 withdrawals, i feel like i am seeing real results. i am adding new categories, slashing budgets, and really thinking about how i can use this system to save for the future. at the end of every month, i will reassess my finances and make sure i’m still on track to meet my goals.


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