This is especially the car if you are someone who rarely uses cash. That being said, the cash envelope system definitely takes some getting used to. Plus, it’s probably something I don’t need either! Takes Some Getting Used to! Who isn’t?! But, if I know I only have a certain amount in my cash envelope (remember I do mine weekly) then chances are that the thing I am being tempted by won’t fit in the budget. I know that I am definitely one that can be tempted by offers in the supermarket. It can also help you to keep to more of a strict routine, because you are less likely to be tempted by things, because there isn’t money there to spend on them. If you are strict with the cash envelope system, you can’t do this! And those one-click systems to can be dangerous if you are an impulse shopper. Especially if you have your cards set up in a virtual wallet on your phone, this feels even less like spending money. That might sound daft, but with everything being electronic now, it can sometimes feel like you’re not actually spending any money. So, if you know you’ve got £50 in the food shopping envelope, for example, then you only have £50 to spend on your food shop and nothing more.Īs mentioned already, the act of handing over hard cash as opposed to tapping a card makes the process much more real. You don’t have any more until you next fill your envelopes. So, once you’ve worked out your variable expenses, just how does the cash envelope system help you to budget? Well, basically, the idea is that when you’ve spent the money, that’s it. Depending on how many envelopes you have, this could be quite a substantial number! However, then you can clearly see how much money you have to live on for the next month, which can sometimes work better for individuals over the long run. Then, you withdraw that amount of cash and divide into your envelopes. The monthly method is where you first work out your variable expenses. Plus, I don’t have to have a lot of money sat in my house that way. I myself use the weekly cash envelope method so I can keep a better eye on what I’m spending. If you do them weekly, then leftover cash can be rolled over to the next week or removed to go towards your other longer term savings (see part two for the follow up to this) which can give you extra in your weekly amount or can boost your other savings. This leaves you with two options weekly or monthly. Once you have decided on your variable expense categories, you need to decide how you are going to budget for them. To be fair, the list can be endless! But, it has to use categories you use on a regular basis in order for this to be an effective budgeting method. Things that might be included in your variable expense categories: Variable expenses are just that the ones that fluctuate and therefore you have slightly more control over what you spend. Those have to be paid electronically, via the bank, most of the time. Not the direct debits or standing orders. It’s also so simple to set up!įirstly, you need to think about your variable expenses. If you are handing over cash for something, in general it will make you think twice about it. You can use it it in so many ways! In its basic form, the cash envelope system is there to provide with actual cash for your expenses, rather than tapping a card. There are two parts to the cash envelope system. But, a budget shouldn’t be like that at all! In fact, if you combine an efficient budget method with the cash envelope system, it might just change your life. But, how do you know which one to use? Often, the word budget conjures up a restrictive, boring process to go through. There are so many budgeting posts around, with various budgeting methods being discussed.
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