Thursday, January 03, 2013

Cash Envelopes

New Year's Day was not only the start of a new year but a new financial month. We do most of our bill paying on the 1st of each month. To get things started off right, I replaced our tattered cash envelopes with new ones!

I've seen some very nice fabric cash envelopes out there and have even thought about making something, but for now, plain white envelopes work really well for us. During the past year, I started  keeping them in a zippered pouch which keeps them all together very nicely.

I've written about our cash envelopes before, but time has passed and we've changed a few things and do more in envelopes than we did then.

When preparing to purchase a home, we got a credit card. While we don't want to rely on using credit cards and we were very hesitant to go this route, this was a way to build up our credit and make it a bit more current. So we started using the credit card for gasoline purchases and then paying it off each month with money we had set aside in that category. To be honest, I've gotten really used  to the ease of paying at the pump and it would be hard to go back to using cash to pay for gas! But we would if needed.

I don't take all of our envelopes with me when going out; only the ones I plan to use. This has saved us a good bit of money when we realize we don't have the right envelope with us and making the decision to just not purchase rather than borrow from another envelope and reimburse once I get home. Sometimes, we will just borrow from another category but not always. That takes a lot of brain work, people, and a lot of times it's just simpler to say, "I don't have enough cash for that today" rather than try to remember all the borrowing and reimbursing!

There's been the occasion where I forgot the cash envelopes all together only to arrive at the grocery store with no money! It's not fun to have to go back but it is what it is.

Our current cash envelope categories are:

Groceries (food, paper and cleaning products, personal care)
Play Money (our small monthly allowances that we can use however we please)
The Gingham Cottage expenses (supplies for my Etsy shop and keeping receipts for taxes.)
Vitamins/Supplements/ Non-prescription Meds
Eating Out/Entertainment (I include gift cards and Groupons in this envelope.)
Clothing and Shoes ( I use this when shopping at yard sales too.)
Hair (Hope to learn to cut Andy's hair myself soon; I get maybe 2 haircuts per year.)
Home (Small repairs, furnishings, decorations)
Office (Office supplies, stamps, printer ink--this is mostly used for buying ink!)
Childcare (Stuff for the kids as well as keeping receipts for tax purposes.)
Dog Food and Treats

**Indicates categories we don't fill regularly but only when there is a little extra money.

There are also some categories where we don't always need money every month. Dog food is one of these. A 50 pound bag of food from Sam's Club lasts us about 2 months so we can skip some months on that!

And of course, as life happens, we make decisions on a monthly basis if we really need to add money to certain categories. Sometimes unexpected expenses come up and we choose to cut back in certain areas to allow for them.

We haven't really sat down and talked about specific financial goals for 2013 yet. A personal goal that I hope to implement is staying within my grocery budget. I've gone over a lot in the past few months and feel I can do better with some careful planning each month. I am also trying to be even more careful with my purchases not only to save money but to reduce the clutter and the amount of stuff that goes in and out of our home.

We love our cash envelopes and feel that they are a great tool to helping us stay on track financially!

**This post is part of Frugal Friday over at Life As Mom!


Wendi said...

I am planning to be better about using cash envelopes this year. Using cash at the grocery store causes me to make better choices. I went on Tuesday night with a list, coupons, caculator and cash. No debit card to back me up! I do use my debit card for gas so I don't have to go into the station and take the kids out of the car.

I am waiting on our first paycheck for the year to work out the budget. Not sure what the bottom line will be with our tax and insurance increase.

Debbie Fisher (debbiedee) said...

We use cash envelopes as well and have been for several years. It makes a huge difference in how much we spend!