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The Cash Envelope System Simplified

First off, I wanted to say thank you for all your love, support, cheers, encouragement and receptiveness to our story. You guys are all awesome! I believe there's power in sharing the story that God is uniquely writing for you. You never know how God will use that in someone else's life. I wanted to write this post since I've had questions about how we implement the cash envelope system. Hopefully you find this easy and useful for you to adapt to your budget and debt free journey. December marks our third month using the cash envelope system. We continue to revise the amount in each fund as we gain more insight into our monthly spending. Overall this system has transformed our spending behavior and saved us a significant amount of money. I can't rave enough about this friends--just do it!


Here are the steps I follow every month:

1. Michael gets paid bi-monthly, but I only withdraw the cash funds after the first paycheck of the month. Typically around the 5th of the month I take my handy dandy, simple cash accordion file and move any unspent cash to the back of the envelope and deposit into savings. Some people choose to roll that cash over each month into the corresponding category for the new month. We find it more rewarding seeing that lump sum deposited into savings to gage our progress and small wins. When you're paying down debt for the long haul, every small win reminds you of your longterm goal.


2. Withdraw cash funds and divide into the following categories - food wk 1, food wk 2, food wk 3, food wk 4, fun, kristin, michael, misc. In the past I used a lump sum for food, but always overspent when I didn't separate them by week. The beauty of monthly cash categories is the adaptability based on your expenses. We stick to the basics with the cash system and capture the remaining sinking funds and bills on our excel spreadsheet.

This is the breakdown by category-

-$600 groceries (roughly between $120-$140 per week)

-$160 fun

-$50 kristin

-$80 michael

-$125 misc


3. I have zero self control (but working on exercising this muscle :) so unless I know I'm meeting friends for mamas night out or doing my weekly grocery shopping I never take cash with me. Planning ahead is key. Michael and I sit down together at the beginning of every month to reconcile our budget, update our sinking funds/savings, and notate all obligations to our google calendar. Knowing the upcoming events whether guys night out, lifegroup potluck, hosting book club, etc. helps us adjust the budget as needed and tell our dollars where to go.


4. Prior to using cash I never saved receipts. Now I save every receipt and enter the totals into the cash receipt tab of our budget. This helps me track my spend by category and sometimes I have to borrow cash from one category to pay back the other. For instance, when I grocery shop I try to only buy food for the week, but life happens and sometimes we direly need household items like toilet paper (this falls under the misc category for us). Instead of making a whole separate trip I purchase the needed item and notate the amount I spent on XXX item to pay back the appropriate account. I try my best to reconcile my receipts by end of day otherwise it gets confusing to track. If you prefer apps to track spending we have friends that use the Dave Ramsey EveryDollar app and/or Mint. Call us old fashioned, but an old fashioned excel spreadsheet works just fine for us.

Snapshot of itemized cash receipts to track spend by category

5. Rinse + repeat! Stay committed to the process and it will become easier every month. Even after 3 short months it has already become habitual.


Knowledge is power and paves the path toward financial freedom. I can't stress this enough because I've come from a place of firmly believing ignorance is bliss. As a stay at home mama we deeply impact our budgets and daily spend. We have the power to vote with our dollar and shape the way our families think about, view, spend and save money. I challenge you to give it a try for 2 months and see what happens. If you find the negatives outweigh the positives you can always go back to your old system. What do you have to lose? Speaking from experience I promise you have everything to gain.

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