Tuesday, September 12, 2017

Budget Tip Of The Day! - How I Use The Cash Envelope System

Are you having a hard time sticking to a budget?  I know sometimes I start one and it all looks good on paper but taking that next step and actually implementing it is another task all together.  The key to sticking to a budgeting is to keep it simple.  Don't overwhelm yourself with high expectations.

If you've read articles that are floating all over the world wide web about making a budget or how to get out of debt you'll find that they all say about the same thing.  I like the idea of having something to guide you and not just try to keep track of all your money management in your head each month.

That is a big mistake I used to make way back when I was first married over 29 years ago.  We didn't have much money and no credit cards so it was easy for me to just know that we didn't have any money left over so no worries about over spending. 

As the year's rolled by and the credit card debt came along it was important to know what bills I needed to pay each week.  So, making a budget and sticking to it when you have credit card debt or student loan debt or a mortgage or car payment is a must for any household.

The first and most important step when making a budget is to write down everything you spend in one month.  Then in month two you make your budget from the way you spent money the month before.  This way you can see where you over spend and where you need to cut back on unnecessary spending.

The second step is to organize your money into categories according to type. Food, housing, car expenses etc... 

The third step that I do is set aside money each week for the must pay bills.  The ones that if you don't pay you won't have a place to live or a car to drive and so forth.  After, those are all allocated for I then move on to the second most important must pay items like food, gas and medical expenses.

If you have kids and they get an allowance then you should write that down as well.

So many experts say don't use credit cards but what about debit cards?  They also say use the cash envelope system.  Well, what about if you loose your wallet or it gets stolen?  There goes all your hard earned savings. 

So, here is the system I use to incorporate the cash envelope system.  I use them for 3 categories.  Emergency, Spend, Save and Give!  That's it.  I set up automatic payments from my bank account for all the major bills and monthly expenses such as mortgage and paying off the credit card debt.

Each month I set aside money for the emergency fund envelope.  Money for the spending envelope, savings envelope and money for the giving envelope.

Now, if you are going to keep large amounts of cash in your home you'll need a good way to hide it right?  So, where would you hide your cash?  Under your mattress?  In the freezer?  All the places a thief knows to look?  No!  Well, where then? 

Glad you asked!  You can hide all that cash in a hollow book safe that has a lock.  That way you can place it right on the bookshelf next to all your cookbooks and no one will be the wiser that one of them has money hidden inside. 

When was the last time someone came over and started looking through your cookbooks?  Never, right!
                                   You can buy them with a slide out drawer style like this one.

                                             Or, with a hollowed out center like this one.