Challenges with a Cash Budget (and how we deal with them)

Challenges with a Cash Budget

 

Just about a year ago, Dory and I went through a bit of a financial awakening.  We made a commitment to paying off our debt (my car and Dory’s student loans) and to saving some money.  In order to help accomplish our goals, we switched to a cash envelope system, using cash to pay for most of our expenses (outside of mortgage, utilities, etc).

It was a huge adjustment and has been a continual learning process.  At first, it felt very weird to be paying in cash – we felt like we were the only ones, and cashiers definitely gave us some strange looks.  As time has gone on, either we’re getting used to this, or more people are paying in cash, including some of our friends. At this point, we’ve really gotten the system down and have been making huge progress!  Here are a few challenges we’ve encountered, and how we’ve dealt with them.

These were our old cash envelopes. We would carry them around in Dory's purse when we did our shopping. They were really bulky and awkward.

These were our old cash envelopes. We would carry them around in Dory’s purse when we did our shopping. They were really bulky and awkward.

You can’t spend it if you don’t have it (with you)

One thing about cash – you can’t spend it if you don’t have it.  There have been a few times that we’ve gone out to do something, and realized we left the envelope with the money at home.  This has really forced us to be intentional with our trips out, and has definitely decreased our impulse buying.  That’s really the whole purpose of the cash budget – to force you to be intentional with your spending.  Dory now carries a different wallet that is perfect for the envelope system (though I’ll just grab some cash out of it if I run out by myself…), which has also really helped.

 

We now use this Thirty-One Coupon Clutch (in a different pattern), which has several sections to organize the categories of our budget.

We now use this Thirty-One Coupon Clutch (in a different pattern), which has several sections to organize the categories of our budget.


You can’t spend it if you don’t have it (left to spend)

The second piece to “you can’t spend it if you don’t have it” can be extremely evident when it comes to the end of the month and don’t have much left for groceries.  Obviously, we’re not going to let ourselves starve, but treat this as a challenge – can we do it?  Can we stay under budget?

To do so, we’ve had to be creative with our meal planning.  Dory even created a menu board to keep us on track. Thinking through what’s in our pantry and finding simple, cheap and yet still healthy recipes, and doing some disciplined grocery shopping (even tallying up where we are as we add things to the cart).  It’s actually been a lot of fun, and we’ve come up with some great dishes.

“Allowances”

At first, both Dory and I managed out own separate checking accounts for our “allowance,” separate money that was allocated for us to spend however we wanted.  After we got used to managing cash, having that extra debit card and having to manage  a bank account with such a small amount of money just got to be a hassle.  We’ve gone to cash allowances, and we haven’t regretted it at all.  Most of what we buy using this money is something local (restaurants, clothes, etc).  The only issue with this is when we want to buy something online…

Online Shopping

So how do we buy things online when they fit into one of our cash budget categories?  Pretty simple, actually – we buy the item with our joint debit card and deposit the cash to cover it.  We always have a buffer in our checking account (or else we would make the deposit first), but we still try to do this pretty quickly, so we don’t forget and spend the cash elsewhere.  We used to write up deposit tickets and have to work with the tellers, until we discovered Wells Fargo’s Envelope Free ATM Deposits – I’ll post more on these later, but they are a huge time saver.

Anyone else out there using cash?  What issues have you faced, and how do you deal with them?

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Comments

  1. Great idea. I think I need to do this. We are on a tight budget right now, but my hubby likes everything on the card so we have an account of things. But I think cash would work better for me.

    Thanks for joining our Show Off Your Blog Party.

    Jules
    A Dose of Jules

  2. Great post! Cash works better for my family, cards make it far to easy to spend money.

  3. I’ve heard of this before with lots of success from people who do it! My hubby keeps telling me to use cash all the time if we’re out and about. I may need to listen to him more often and show him this post. Thanks for sharing this @ The Show Off Blog Party!

    Jessica
    The Wondering Brain

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  1. […] usually I have let Tim take the lead on the financial posts (“Challenges with a Cash Budget” and “Envelope Budgeting“), but since I am in charge of the nursery, I want to […]

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