I know I’ve already done a tutorial on how to create your own Cash Envelope System but today I am elaborating on that with how to utilize the awesome features of the cash envelope system without cash. Now a days most people don’t use cash-although it is much safer because there is no risk of identity theft by using your cards at sketchy places. Many people want to budget their money while still having the convenience of using their debit or credit cards.
Here’s How You Can!
You can still use the envelope system by taking envelopes and labeling them with the things you spend money on such as: rent/mortgage, groceries, gas, insurance, credit cards, electric bill, cable bill, shoppings, etc. along with the amount you are allowing yourself to spend for each amount. For example: I budget myself to only spend $100 on groceries every paycheck so on my envelope I will write: Groceries $100.
You want to write that near the top or in one of the corners. You want to leave the front or back of the envelope open for writing down your expenses. Now that you’ve budgeted yourself a certain amount for each category and written it on your envelopes you are ready to budget!
When you spend money in any of the categories keep your receipts and put them in the envelope. Instead of filling the envelope with the amount of money you are allowed to spend you will fill it with the receipts. Once you’ve purchased something in a category and bring the receipt home you can take it to your envelope and subtract that amount from your allowed amount. This is how you will keep track of how much money you have left to spend in your budget.
The amount that you write as your allowance for that category is the amount you can spend per paycheck, not per month. You can do that if you would like but I personally like to organize my budget by paychecks because my paychecks are never the same so I have to accommodate for that every payday.
Once you reach $0.00 on your envelope you are done spending money in that category! One downfall of using debit or credit cards with this system is that you may be tempted to still spend money once you’ve reached $0.00 because you can see you have more money in your account and it is easy to just swipe your card. Using cash forces you to physically see your allowed amount to dwindle as you spend so you know when you are nearing $0.00. You must be disciplined enough to stop spending once you’ve reached $0.00.
Another Way to do It
Instead of using envelopes at all you can type up a spreadsheet that you update with receipt amounts after each spending. If you are more techy this way be more useful to you. Other people like to have things in writing. Either way you are budgeting and saving money!!
So go out and create your envelope system with cash or without and get to saving!