Our grandmothers and great aunts used them and many budget experts promote them. Envelopes.  It seems antiquated. Especially in today’s world of automation and convenience, why use an envelope for your money?
There are many reasons for not using envelopes. “It’s dangerous to have that much cash available” or “It’s embarrassing to pay with cash” or “I’m not going to look like an old man/woman using an envelope”.

If you have said this to excuse yourself from using ‘the envelope system’, you’ve missed the point. It’s not about the envelopes, it’s about the cash.

Most people spend an average of 20% more when using a credit card.  Use of a debit card can also result in increased purchase amounts.

When cash is used, there is a finite amount of money to spend. Credit and sometimes debit cards give the sense of infinity – spend whatever you want – worry about it later.

Carrying cash can be dangerous. Be careful. Limit the amount of cash put in your envelopes. Yet, you don’t have to carry the envelope, just use the cash IN the envelope when needed.

Using cash for destination shopping provides a two-fold benefit. One, it requires you to be more intentional. For example: IF I need a new pair of boots, I use the cash in my clothing envelope. I have been putting money aside for a few weeks, and I now have $200.  I put the $200 in my purse and go to the store – an intentional purchase.  Second, the purchase will be thoughtful.  I may be able to purchase boots for $80, and save the other $120.  Because I have physically touched the money and parted with it, there is a conscious impression on my psyche. I begin to spend differently. Habits begin to change.

It’s about the cash. Save for those budget items where you tend to over-spend or want some control. Keep the cash in a safe place. Don’t let it pile up…if you are saving for a piece of furniture, maybe make a deposit every $100 saved into your sinking fund, designating if for furniture. When ready to purchase the new couch, go to the bank , withdraw the cash and get a deal!

It really is about the cash. Envelopes are the holder, the tool to help you be in control of your money.

For the love of family,

Kristin