We have envelopes for all of our expenses and the first of every month I put the budgeted amounts into their own specific envelopes. For example, I have one envelope that is labeled "hair cuts," one labeled "food" and so on. You can be as specific or general as you want with your labeling. Some people may have their food separated into "grocery" "restaurants" "toiletries." We choose to make our food envelope cover all groceries, eating out and any other items bought at the store other than clothes. I don't want to have to figure out my diaper, shampoo costs, etc. It makes more sense to keep it all together for us.
You can choose to be very strict with your envelopes so that only the money coded for that expense may be used for that expense or allow dipping into other envelopes ;-) We have decided to allow ourselves some freedom with this part because we have a tendency to act on impulse. We will really want to go over on our food allowance one month to have a better date night or I may need a little extra cash for a garage sale find...the key is that we don't use the debit card.
The times that we haven't gotten the cash out and put it in our envelopes we spend so much more money that month. It doesn't matter if I am trying to stick within the budgeted amounts or not, I will always go a little over and a little really adds up when you do it in every category. I would be so humiliated if I got to the check out at the grocery store and didn't enough cash to pay for my items, so I am much more careful about what I purchase, than if I use my card.
There are so many variations of how you can make cash work for you and your family. The most important thing is to put that debit card away!
3 comments:
This is something we do to, spending money with the debit card is too easy and you never know where the money goes. With cash when the budget is gone its gone.
We have done groceries cash only for a few years and it makes a huge difference. The rare times I forget to take out cash before I go shopping because I am in a rush I do spend more - not much but it adds up over time. Now that banks are starting to charge for debit cards I really need to get more disciplined on cash for everything else.
Hi Brooke! Found you over on the Nester. I'm doing "31 Days to a Clutter Free Home" this month. As a heads up, I'm going to give a shout out to your blog tomorrow when I cover "Financial Clutter" on my blog. I'm a huge Dave Ramsey fan too. My husband and I paid off our debt in 2007, saved an emergency fund in 2008 and then spent it in 2010. So we're working on Baby Step 3 again. I'm just glad we didn't go back into debt last year.
Cash IS king,
Katie :)
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