When it comes to budgeting, many people on the internet purport to have the answer. Taking advice from others’ experiences is valuable, but you should ultimately pick a budget that works for you and your lifestyle. With that said, one technique you might consider is a cash budgeting wallet. In this guide, you’ll learn what it is and how to use it.
What Is A Cash Budgeting Wallet?
A cash budgeting wallet is a specific wallet used with a cash envelope system. The cash envelope system is a budgeting technique popularized by personal finance guru Dave Ramsey. Based on the idea that cashless payments like debit cards, credit cards, PayPal, bitcoin and the like tend to make people overspend, the cash envelope system advocates cash-spending only for your expenses.
In a nutshell, you divide your monthly expenditure into categories like groceries, gas, clothing, etc. and label envelopes with the name of each category. You take out the cash you’ve budgeted for each category and place it in the envelope. When you purchase things, they must align with a certain category and you pay with the cash in your envelope.
Furthermore, if you’re ready to wholly embrace the cold, hard cash envelope lifestyle, you could invest in a cash budgeting wallet. These wallets are specifically designed for the cash envelope system, typically with extra pockets to carry your envelopes with you.
How Do You Use The Cash Envelope System?
You may have already detected a few problems with this method. For instance, what if you’re not the only one buying things in your family but only you carry the cash envelopes? Or you accidentally leave the envelopes at home? What about bills that must be paid online?
Different people will have different ways of handling their budgets. If keeping two envelopes for each category with half for you and half for your partner works, then do that. If you need to stay cashless to pay your fixed expenses, then keep money in your checking account and pay that way. The important thing with the cash envelope system is keeping track of every purchase and stopping yourself from overspending.
Start A Cash Envelope Budget Today
Getting started is totally free. You have to sit down, examine your expenses and plan your budget. Determine how much you want to spend on each category before touching any envelopes. It also helps to keep a master spreadsheet of all your budget categories, along with cashless bills you must pay.
After establishing a rock-solid budget, go take out your cash and start labeling your envelopes. Withdrawing cash in one big lump sum each month might be risky, so aim for every two weeks or every paycheck instead. Your system should work around your paycheck – planning the money that goes out with no regard for the money that comes in will create problems!
The hardest part of the cash envelope system is sticking to it. Don’t let yourself cheat by using your debit card if you spend all your cash. In fact, try leaving non-essential debit and credit cards at home when you go out. Having a visual, tangible sense of your money will help you stay on track and keep your budget in mind when you spend.
As mentioned earlier, finding the right budget for your life is essential; the cash envelope system might just be the budget you need.