I love using coupons and finding great deals. By doing this I am able to stay within budget and save money. I am all for saving money. One of the biggest tool that I discovered while taking Dave Ramsey’s Financial Peace University course that has helped me save money is to use cash with the envelope system. I know it may seem a little crazy to think that using cash can help you save money and help you to budget as well, but it does. There are three reasons I love the envelope system and so should you.
#1 The Envelope System Makes Your Money Tangible
We live in such a fast-paced and digital world. With direct deposit, debit cards, ApplePay, and so much more, it is so easy for us to never actually see any of our money. Money can be deposited, transferred, or withdrawn with a few clicks on an app. This is great in so many ways, for things like paying bills or giving money to your kids that may be away from home. Yet, this also disconnects us from our money and makes it easier for us to spend it.
For example, say you are at the store and see a pair of shoes that you love. Let’s even say they are on sale and only cost $65. So you pick them up, take them to the store cashier, swipe your debit card, and you are done, easy-peasy. Yet if you had to hand the cashier $65 cash, you would most likely take more time to contemplate your purchase.
Swiping a card or taping your phone to pay is completely different from having to hand over cold hard cash. Having cash makes your money tangible and makes you actually think harder before handing it over to purchase anything.
#2 The Envelope System Makes You Stay Within Budget
Budgeting is all about setting a certain amount of money to be used in a particular way. By combing your budgeting with the envelope system you are helping to ensure you stay within that budget. Because when the money you budgeted is gone it is gone. Unlike with your debit card, which could be plus or minus $5 dollars, may not be a big deal. Yet, if you do not have the extra $5 cash, you do not have it. So you have to adjust your purchases in order to stay within budget and not spend foolishly.
This definitely takes some getting used to, but it is worth the effort. There have been many times when I get to that last week of the grocery budget and all I can buy that week is produce, milk, and bread. So it forces me to shop my pantry and deep freeze. Which is never a bad thing and keeps me in budget.
#3 The Envelope System Teaches You Discipline
This goes hand in hand with staying in budget. In order to make sure you are budgeting successfully, then you have to be disciplined with your spending because you cannot spend what you do not have.
For example, if you only have $400 to spend on groceries for the month, then spending $100 on steak for one dinner is not the best decision. Now if you are at the end of the month, you have been disciplined with your spending all month, and have the money left to splurge. Please do!! This is something I try to do often. I try to stay really disciplined with my spending at the beginning of the month. This may allow for a greater budget towards the end of the month, so I can splurge a little.
The envelope system is a great way to make sure you are all budgeting successfully by making your money tangible, keeping you disciplined, and staying within budget.
I’d love to know if you use the envelope system
and if not is it something you are willing to try in the comments!