Cash budgeting using envelopes
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Why do I use a budgeting cash envelopes system every month? Well…I find budgeting hard. There, I said it. The truth is that I find budgeting hard to stick to, and although I do it, I’ve yet to make it SO second nature that I don’t even have to think about it.
I’ve tried every which way to budget, I really have. I make lists, and I plan and I work out the numbers and then…..it just doesn’t work. I don’t know if it’s because I just can’t be trusted with a bank card or if it’s something more subconscious, but using cash allocated through my budgeting envelopes system is the only thing that works for me and my family.
I should say now, I’m not extravagant. Not in any way shape or form. We’ve got money goals (hello mortgage, I see you’re still there!) and we’re both totally on board with that. I think it’s just that I feel I can loosen the purse strings so to speak, the odd £10 here or there doesn’t hurt. Except that it does.
Anyway, in this house cash is king and I’m going to talk you through my budgeting envelopes system. I’ll show you how I allocate the money each month, the labels I give my envelopes and what’s left at the end of the month.
Preparing your budgeting envelopes
Like most families I suspect, we have an amount of bills in the form of Direct Debits coming out of our bank each month. Leave this amount in the bank, so your Direct Debit’s can come out through the month.
Make sure you’ve paid yourself first, in the form of paying extra towards your debts. Take the rest out in cash.
You’re now going to give every last penny a home for the month. They’ll be NOTHING left after you’ve finished. And you’ll feel all smug knowing you’re going to have some money left at the end of your month!
This system is not complicated. It just needs a little planning and you’re away, so the next thing you’ll do is give your money a home. These are the labels, or homes, we give our cash each month.
When I started to think about living debt free, I made a pact with myself to spend A LOT less in the supermarket. I’ve stuck to this and cannot believe the amount I used to spend. I make a list, make a meal plan and then stick to it. I DO keep a little back each week for milk, bread etc…but generally, I’m in the supermarket ONCE and no more.
This is the easiest one. We know pretty much what fuel costs and what we use. If we use the car less one week, that’s a bonus as there’s less to fill up next week and they’ll be money left in the budgeting envelopes at the end of the month!
Eating out? What? On a budget? Yep, yep and yep. We really like to eat out. Just because we’re paying off our mortgage and before that getting debt free doesn’t mean that life stops in the mean time. We budget to eat out a couple of times a month, but we always use a voucher of some sort to lower the cost (see below).
You’re still living while you’re getting debt free and so you’re going to need some money for entertainment! Many (most?) months, we find FREE things to do and don’t end up spending much. But if something comes up, we’ve got a little out by if we feel like it.
Things spring up and although usually they’re small things, they’ll throw you off track if you’ve not allowed some cash to cover them. The budgeting envelopes like this one get the least amount in it and a different amount each month depending on what we’ve got spare. I’m trying to balance the crazed need I have to lose the mortgage, with being okay with spending a little. However, most months I’m reluctant to put much in here as I want to give it all to the mortgage!
Find a 50p in your change?
If you’ve found a 50p in your change, make sure you check to see if it’s a rare one! Many 50p’s are worth MUCH more than their face value!
How to make your budgeting envelopes stretch further each month
There are several easy ways you can make the cash you have each month stretch further than it otherwise would!
Food vouchers from magazines etc…
There are a ton of money off coupons for supermarkets. The aim of my cash budgeting envelopes is really to make our money last the month but also I have another ‘secret’ thing I like to do. I like to see how much I can have left over, rather than it all being gone.
One way I do this is with coupons for the supermarket. I’m NOT a total coupon nut (I wish I was!) but if I see them , I cut them out and put them in my envelope. I can save about £20 a month doing this.
Some places online you can find coupons are:
Also keep your eyes open in magazines and newspapers. These coupons are everywhere. Keep some scissors in your bag and grab the coupons wherever you see them!
Save money on entertainment and going out
I wrote a post here about how we haven’t paid for cinema tickets in forever, but there are other things you can get for free as well. Restaurant vouchers are a must for us if we’re eating out. I use Tesco vouchers if we have enough, and if not I go here and see what’s available. If you study, it’s well worth signing up for UniDays as there are LOADS of vouchers on there for all sorts of places, including restaurants.
So essentially, that’s it. It’s really pretty simple and I find it FAR easier to stick to than using a bank card or a budgeting app. I’d love to hear your experiences of using the cash system…let me know below!