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 Money can be deposited, transferred, or withdrawn with a few clicks on an app.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!
We;ve used a modified envelope system for about 20 years. Definitely a great way to keep track of expenses and stay within the budget.
That is awesome, Aren. I am in the midst of modifying my use as well, so it fits our family’s needs now.
Hello, we are doing this system, which could have been done so much earlier in life…so Thankful we’re taking the course!! I am wondering where you find the wallet to hold different labelled sections for your money? Any ideas??
I wish we have taken the course earlier as well, Kimberly. I purchased my cash wallet from a seller Thrifty Zippers on Etsy. I have had it for years and love it. The link to that shop is here.
I am so bad at saving money. This is such a smart idea.
This is such a great idea! Budgeting is so important!
I felt the same way when I first discovered it too, Suzanne. 💕
Great tips. The envelope system would certainly curtail my spending for sure. I’m a swipe it kind of girl. 🙂 But definitely a great way to teach saving to kids.
The envelope system is so helpful! We need to start that again. My husband actually used to work for Dave Ramsey, he learned a ton there!
I use something like an envelope system minus the envelopes. I use different paper clips with labels since my wallet is smaller.
I learned the hard way with the use of credit card. Now I keep cash handy so I can budget. I’ve tried a more similar approach to envelope system that is labeling jars to see my actual savings and budget to help me stay motivated. I think I’d pass on the jar system to my son and use envelope instead 🙂
I think most of us learn the hard way when dealing with credit cards, Nancy. But finding a system that works for you and that you can use to inspire your kids as well is awesome. 💕
we love it too!! 🙂 It is challenging to start but seriously so helpful!
Definitely challenging to get started and stay committed at first, Katie. But I’m so happy we stayed committed. 💕
Sounds great but I’ve never tried it. Our bank has an app that rounds up all our expenses in different categories and that’s what we use 🙂
Honestly, we’ve had friends recommend the envelope system before and we just fly through cash. I guess I should maybe give it another chance, but we found that we were just as “good” at spending cash as we were our debit. 🙁 I feel like it’s just us though. We are so undisciplined. We should try the system again.
Being disciplined is so important, Kristin. Not just in our finances, but is most areas of our lives. So I would definitely try this system or any one that will work for you that you will be committed to. 💕
These are all great tips! I need my debit card, but you can definitely replicate this system and still use your card.
Yesssss🙌🏻 We’ve been working through Dave’s plan for over a year and using this system. It’s amazing and I’ve recommended it to sooo many friends!
This is such a great idea for staying on a budget. I’m a visual person so being able to “see” how much money is set aside for things like groceries would be very helpful. It would definitely cut down on overspending.
I took the Dave Ramsey class but it was at a time where I couldn’t really apply the tips since I wasn’t working but I do still use a few tips now. I like the idea of the envelope system but I found myself just adjusting or kind of cheating lol I have to learn more discipline for sure.
I agree with you on this. I used to have the envelope system but no I pay via online banking and most times the left over money goes to the wrong things 🙂
I like the way that you explain the benefits of this! We’ve tried it before and had trouble adapting it to our needs! I’m going to give it another look after reading this!
My youngest daughter and son-in-law have actually been using this envelope system for quite awhile, along with paying down debts via the “snowball” (?) method (I think that’s what it’s called!) I’m seriously thinking about trying it, because hubby and I definitely need to do SOMETHING more effective than what we’re doing now.
This is fantastic advice for those who struggle staying on budget. I don’t have this struggle, but I can see this approach actually saving me some money in the long wrong.
I think this is just a great way to budget for everyone, Jen. Staying on budget is no longer a struggle for us, but it’s important that we use the tools we have to keep us on budget and working towards true financial freedom. 💕
Very enlightening! Makes me want to go get organized and cut some coupons!
Awesome, Heather! I need to get back into clipping coupons myself.💕
I’ve never used a system like this. Sometimes if I am saving up for something fun for me (or spending cash for a trip) Ill stash away a little bit of cash at the time (like if I get a $5 bill). I can see how this would be a great system for those trying to really watch what they spend.
Stashing away a little extra cash for yourself is always a great idea, Harmony.
We just started using the envelope system, and I couldn’t agree more with all of this! I will also add that a huge bonus for us is that it shows our kids how tangible money is. When using credit or debit cards, our kids literally think we have an endless flow of money. But when they see the cash dwindling in the envelopes they are more aware that we can’t spend endless money on things. In the same way, they can see that we sometimes have enough to buy some frivolous things!
I know couple of people that use this kind of system. We don’t keep cash around so using this system is more difficult for us. Works great when teaching kids and teenagers how to handle money.
I used envelopes at one point and it was really helpful! Now that I get paid via direct deposit and don’t want to have to withdraw all of the cash each week, I am finding the Mint app to be a good way to keep an eye on everything. I’ve really been trying to crackdown on my finances lately and might consider going back to envelopes if I feel like I need the discipline. Glad you found a system that works for you!
I LOVE your envelopes!!! So pretty! We have also seen so much success adding these to our budget!
The envelope system is wonderful and such a visual way to keep track of spending habits. Ideal for individuals or families trying to learn and understand budgets.
I need to do this. I keep telling myself I will once we get settled into our new house. It’s so easy to spend money when you put it on credit.
We have used the envelope system for years and it has really saved us a lot of time and money. We always know where our money is going.
Does the envelope system works well for someone that wants to have a little bit of blow money?
We have a budget for our regular expenses and my husband and I agreed many years ago to always ask each other if we were going to spend more than $50 on something that was not in the budget for that week. It works as a good check. Cash just isn’t realistic in our life, but would be a better way to ensure we stay in budget.
I’m a big fan of the envelope system, for me it means that I’m never scrabbling about for money at the last minute. It’s all in the right envelope ready for when it’s needed.
These are great suggestions! It is so challenging for so many people to stay on budget, thanks for sharing!
I love this! I tend to not realize how much I am truly spending with everything being so accessible digitally. It really does add up and something I need to stay more on top of. I will be introducing this idea to my husband and hopefully we can get our finances back on track!
Love the envelope system! I too agree that it makes it tangible, and that is so incredibly important. I see such a different in my teens when they are required to use cash, vs having Mom swipe the debit card. It is not only important for us, but in a time in society when money is so easy to access, sharing true concepts of money management with family is key to future success! Thank for sharing!
Loved the Financial Peace Course! While my husband and I never did the envelope system literally, we stuck to it within our budget and as long as you know you can not go over that it works so well!
I totally agree that you think about purchases a bit more when you are making them in cash. Thanks for sharing.
I’ve never used Dave Ramsey’s envelope system, but I do know that I am much more conservative in my spending when using cash. Great post lady!
Such a simple and common sense system to get a grip on your finances. This should be a required course in high school!
Yes! We have been on the envelope system for a few months and we love it! (Sometimes it’s a pain, but in the best way, lol). Do you have an envelope for personal fun money? Do you recommend having a “margin” envelope?
I always liked this idea. I first heard about it from one of my high school teachers – him and his wife did it!
-Lauren
The envelope system sounds like a great way for people who really struggle with budgeting to get on track! I personally put everything on my credit card (it has a great reward cash-back program) and pay it off in full each month, but I can imagine my strategy would be hard for someone who has a hard time sticking to a budget!
This looks like a great system! Right now we use Mint and it does something similar but online. I love the visual aspect of what is running out in your budget!