I’m 100% convinced that cash budgets are THE way to stick to a budget and ultimately save the most money. But that doesn’t mean the first time you try a cash budget, it’s going to work out perfectly.
We slip a note like this to the teller every month. It tells them how many of each type of bill we want for our envelopes. It took us several months to figure out what size bills to put in each category to make it easier at stores like Target or Wal-mart where I spend from more than one category.
One of the mistakes we made in the beginning is not having enough categories. If there’s too much stuff lumped in together there’s not going to be enough money for something. For example, if you have food lumped in with cleaning supplies, kleenex, and shampoo—towards the end of the month, you might not have enough to eat….but your hair will smell good.
Stacks of cash ready to be divided up into envelopes.
My husband and I made a video for you of how we divide up our cash envelopes. It gives details on the different categories we have in our envelopes. There are a few categories in our budget which aren’t currently funded. Items like: haircuts and beauty, furniture replacement, and date night. As our income goes up, we will fund them. We have $0 place holders in the budget so we don’t forget.
A lot of our categories aren’t funded as much as we’d like. Every time there’s a change in one bill, other categories are affected. For example, this month our gas bill went way up with the colder temperatures, so we reduced our grocery, vitamin, and clothing categories to make up for it.
Some of our budget categories go into the safe instead of my purse. This allows us to save up during the year until a big bill annual comes. This includes things like soccer fees, summer camp registration, and appliance replacement. If I had this cash in my purse, it’s likely I would spend it on a cute lamp….just keeping real.
