Our biggest concern about starting the cash-centric Envelope System was ditching our credit cards – and the rewards we get for using them. We figured that if we got 1% cash back by using our credit card, we were saving money. And who doesn’t love the offer of free airline tickets, etc, etc? And since we used our credit cards like cash – anything we bought our credit cards got paid off in full monthly – we thought we were doing just fine.
My second concern was that I’d spend the cash faster than I’d spend on our credit cards since every time I went to the ATM the cash I got was gone in a second.
But our friend Jenna convinced us to try the cash method. She and her family had huge success with it, and she assured us that spending cash makes you think a lot more than handing over your credit card. The philosophy behind it is that if you’re handing over cash – and you know that there’s a limited amount of it – you’re going to think twice about purchases.
So we figured we’d try it for a month. And there was no looking back. We truly do think before making purchases. Every Target or Grocery trip with a couple extra $5 or $10 items starts to add up over the course of the month.
And since we’re all about keeping it real here, I’ll give you some numbers. We thought before purchasing so much that we saved $500 of the money that we budgeted to spend in the month of January – and we ate out, went to the bars, bowled with our family, etc. Those savings are beyond money that we saved just by establishing a budget that limited unnecessary spending anyway. All in all, we saved over $1000 that we would have normally spent using our credit cards during the month on random purchases. That’s way more money than we would have received with our 1% cash back rewards. Needless to say, it’s love.
Hooray! Now you just need a fancy cute money holder. I love the envelopes.
wowee! that is great girl. And seeing as how we are totally gonna be brothers…I vote that you share the wealth…brothers don’t shake hands, brothers gotta share
seriously though – awesome!
Momma Mia – that’s a lot. We did the envelope system the first six years we were married and love it. Now, our branch isn’t very close, but spending money that way is already ingrained in us. I can’t say enough good things!
Wow! Thanks for sharing the numbers. That really helps a lot. My husband will be sold when he reads this.
The Envelope System: It’s for couples!
I’m still not a believer in the envelope system. In part because I have yet to actually try it. I just can’t seem to get my head around it. I’m single and have a spontaneous lifestyle that requires me to make decisions on the go. How in the hell do I keep all those envelopes with me – since I don’t know when I’ll need to use them? Maybe I’m trying to complicate things too much. Maybe I’m just helpless. What about budgets? How do you go about setting up your initial budget? SO many questions…..
Signed,
Frustrated
Dear Frustrated,
. If you actually want to try it, I think that based on our discussions, you’d benefit from giving yourself a weekly cash allowance for all of your non-essential spending – so not groceries, cross-fit, etc – and seeing how that works for a month. We can talk about it at the EWu/Sarney wedding. Please wear a top hat.
You’re not a believer because you don’t want to be
Love,
Your Ex-Wife
Are you serious? $1,000!? Wow. I will have to talk to my husband about that. (Until now, we too have fallen into the thought that 1 to 5 percent back was worth the credit cards, but maybe not . . .)
I’ve been dying to try this for … I don’t know… ever! But I’ve always been hesitant. Now that you’ve shared your numbers how can I not try it!
So glad you’re all finding this helpful (with the exception of Mr. Negativity. I love you Kev). I’d love to hear if any of you decide to try this method (and for those of you who already do it, keep sending your tips – we’re learning every day!). Disclaimer: Our $1000 savings was tied to not budgeting at all (except in our head which never worked) before hand – so we’re enjoying budget and envelope success all in one.
i’ve been credit card free for a couple of years now. and i must say, paying for things in cash DOES make you think about where your money is going. There’s definitely a finiteness to it.
Congratulations on your monthly savings!