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Guest Post: The Envelope System Experiment

photo by pfala

Guest Post by Jenny Whitney

Paying with cash…we all did it at one point. When you are a child and are too young to have a credit card or debit card or checkbook, it is quite socially acceptable to pay with your allowance or hard-earned lemonade stand money.

At some point in our society, though, paying with cash becomes more unusual. I, like most Americans, have a credit card, and since we pay it off in full each month, I always thought I was being as responsible as possible with our finances.

But as I started to learn about deals, I became intrigued by this Envelope System that I read about (you can read about it here, here, and here). Could it possibly help me to be a better steward of the money we’ve been given?

I decided to give it a try–but on a smaller scale. Our budget for groceries and consumable household supplies (soap, detergent, toilet paper, etc.) is $40 per week and I do almost all of the grocery shopping, so that seemed like a logical place to start. So it began.

Here’s basically how it worked for me:

As I headed out to go grocery shopping on my first cash-only day, I stopped by the ATM and took out $40. I stuck it in an envelope and only used that to pay for all of our groceries. If I happened to purchase other items (gifts, clothing, etc.) while I was grocery shopping, I just asked the cashier to do separate transactions.

The following week, I added another $40 to the change from the previous week. And this same pattern has repeated now for about three months. It seems so simple–but it’s teaching me a lot about how I shop. 

Here are six lessons I am learning:

1) No Mental Math Needed–Before trying out the envelope system, I would mentally try to add up how much I had spent at various stores in my head to see how much I had left. Well, if you’ve ever taught mental math, you know that estimation is an oft-used strategy. Needless to say, I often went over my budget using this strategy (without even realizing it until checking our statements later).

Many weeks, the amount was as little as $5, but that adds up to $260 over the course of a year–the equivalent of over 6 weeks of groceries on our budget! With the envelopes, figuring out how much I have left to spend is easy–just look in the envelope.

2) When You’re Done, You’re Done–It was so tempting for me to “borrow” from future weeks before trying out the envelope system. If I found a great deal, or just really wanted to make a particular recipe, I would just tell myself I would spend less the next week. Of course, when next week rolled around, I would have either forgotten or have convinced myself that I should go ahead and spend the full budgeted amount. Having a certain amount in cash has really helped me develop the discipline of saying, “Enough’s enough.”

3) Jell-O is Not a Food Group–Although I try to stockpile, there are certain staples that we need to get pretty regularly (like milk, eggs, fresh fruits, and vegetables, etc.). The first week that I tried out the envelope system, I realized something very important: If I do the “deals” first and then look to buy the staples, I’ll run out of money and have to decide between eggs and milk.  Although I meal-planned and shopped off of a list before going cash-only, I now prioritize my list based on what we need and what we can do without.

4) What’s the OOP (really?)–Check out many deal forums and you’ll see a discussion on a “free” item, only to realize that you’ll get a gift card/Catalina/ECB/Register Reward when you purchase the item for the amount you spent.  Before the envelope system, it was really easy to let myself believe that I was getting the item for free–but what I’ve learned is that when I pull out some money from that envelope, that’s money I no longer have to spend.

Although I might have a money replacement, I am often limited on where and when I can use it. That doesn’t mean I never do these deals, but it does help me to be much more aware of what my real out-of-pocket expenses are and I don’t justify going over my budget by saying that I’ll get a gift card back. 

(Note: I know “rolling” gift cards and Catalinas makes for some great deals; I just think it was easy for me to forget they actually cost something to start with.)

5) Life Will Go On–If you are anything like me, discovering the world of coupons and deals was a turning point in my life (“You mean I don’t have to pay for toothpaste or razors ever again?”). I will admit that during the first few months, I went a bit overboard.  I felt the need to do every deal and print out every coupon.

With the Envelope System, I am learning to let go of some of the deals and I am finding out that it is okay–we still have more than we need.

6) Rely on the Lord. I like being in control and couponing fed that feeling for me. I know more about “the systems” than most cashiers around here and I know what I am able to get for free or really cheap.  I found that putting limitations on my couponing (through having to prioritize, miss deals, etc.) has helped me to remember the real Source of all that we have and consequently not worry about it.

So, what’s the bottom line? I tried out the envelope system thinking that I might save some money, and I have. More importantly, though, I’ve learned lessons that will help me to be a better steward of the money we have. I don’t know if the rest of our lives will transfer over to the Envelope System, but I know the things I’ve learned will.

Note: These are simply lessons I am learning; I don’t suggest that they are universal to all bargain shoppers. However, I would encourage you to try out a cash-only system (even if only for groceries) and see what you learn about yourself. You just might be surprised!

Jenny Whitney is a stay-at-home mom of a lively one-year-old son. She is learning to be a loving graceful wife and mother, happy homemaker, and responsible steward of all of her resources.

From Crystal: Do you follow The Envelope System or have a cash-only policy for some or most of your purchases? If so, I'd love to hear how it works for your family. If you'd like to learn how it works for us or how to get started making it work for you, too, you can check out my article here.

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  • Ronda says:

    We started the envelope system recently and it does work. We are following Dave Ramsey’s Total Money Makeover Plan and loving it!

  • Jennifer says:

    Thanks for this post. I love her point about life will go on. I found in the beginning of my coupon adventures I felt I needed to hit every sale and be able to say wow I only paid this or that but I have really pulled away from it alot. I was buying way more than we needed and waisting ALOT of precious time going through ads and coupons when I could be spending it with my family. I still bargain shop and use coupons but I do not allow it to consume me.

  • Katherine says:

    We do the envelope system for gas and groceries in our house – $150/month for groceries and $60/month for gas. Any extra grocery money we can spend either to stock up on things (or to take advantage of good deals) or to splurge and go out to eat. The gas money works for the commutes that we make (we live within 5 miles of work/shopping/etc.). We budget any trips separately, so gas for those is figured differently.

    We just started this a couple months ago, and have been able to stick with it fairly well, although we do find ourselves occasionally going out to eat using debit cards because we don’t want to wait until the end of the month to see what we have left. Hopefully after a couple of months of having extra we’ll be able to just carry money over and that problem will be solved also.

  • Lisa says:

    Excellent post.

  • Sue says:

    We started with the “cash-only” system just after the new year. Several months after that, and really learning how to coupon, I actually asked my husband to lower my weekly budget by $60!! That’s $720/year! I’ve found things are much simpler and less stressful with cash-only. I use it for grocery, drugstore, pet food, etc. Anything that’s not clothing or gas…and it works great! I know exactly how much I have to spend at all times and it does make me think more critically about how I spend and where. Like other ladies, I’ve also come to the point where I realize I don’t need to hit every single sale…how many disposable razors does one couple really need?! :o)

  • emily says:

    Great post. Thanks so much for the reminder that we can’t create our own security no matter how many piles of free stuff we have. God is our true source of stability.

  • Elizabeth says:

    I started a cash-only system a few months ago, and it really helped my budget. I have a weekly amount that covers groceries, dining out, dog/chicken/pig/goat food and misc purchases.

    I enjoy using a system that covers more than one category. Some weeks we don’t go out to eat at all, so I’ll spend a little more at the grocery store to make a special meal at home. Some weeks we need food for all the animals in one week, so I have to be diligent about what I spend elsewhere. Some weeks seem easy on the budget all around, so I might buy a latte or a discount book, or I take the kids to the zoo. Some weeks we have $20 leftover that I stash away.

    This system works very well for me because I love flexibility and the option of choosing my priorities each week. I always stay within my overall cash budget, but every week is different, every week is a new adventure.

  • Toni :O) says:

    Great post, although I’m amazed you can spend $40 for a whole week of groceries….here in Michigan…I spend $40 just on produce for our weekly grocery shopping on our family of four and that usually doesn’t buy all of our produce that we typically eat and that’s using a local farm through door 2 door organics too! It just stuns me how so many of you can eat for so cheaply. Hats off and kudos to ALL of you!

  • Sandy says:

    I started couponing about 25 months ago and I too, bought every deal. I kept what I needed/wanted and the rest went to others. I am grateful for the blessing of learning how to coupon and feel I am a much better steward of my money. 3 months ago I started the envelope system. I have always been a good saver but, I have found that with the envelope system I spend even less. I have added a wish envelope in which the money placed in it is for a specific purpose. Currently, my wish envelope is for a new washer and dryer. I have been able to save an additional $188.00 this month alone to the fund just from utilizing the envelope system which makes me more aware of my spending. Thanks for a really great idea!

  • Honey says:

    I have been using cash for my part of the budget which is the household/grocery $. I sometimes still go over a little, but now I realize it right when it’s happening. When I look in my wallet and the money’s gone but I just have to have that extra item -then while I’m buying it I know: “I am going $4 over the budget right now”. So my overages are more like $4, not like $30!!! And like the guest poster, I just say no now to some deals. Like this week, I only got the school supplies at Wags because I had spent my $ and nothing else seemed like a very good deal there this week. And I agree,
    trusting God is a wonderful thing and is the duty and priviledge of a Christian.

  • Julie Curry says:

    Great post!
    First of all…$40! Wow! I am amazed! I was also shocked on how little we could get by with..but that’s still $100 a week!
    Second of all…the cash system is a great idea – I have kept up with my spending by using a spreadsheet (I love spreadsheets, percentages, etc…did I mention I’m an accounting major?). I transfer all of our spending from my online banking to my spreadsheet, and break it up into categories. I add to the grocery category each time I shop to have an idea on what I’ve spent in a month! It’s painful to see yourself $30 away from your budget knowing you still have a week and a half left of the month!
    As far as proritizing and learning that you DONT have to catch every deal – I had to learn that the hard way as well! Trying to get every deal, every coupon, at every store…is more than I can do! So I am slowly learning to pick and choose, and as my mother says, “Deals can leave you broke!”
    And YES – God is our true source, and he always provides! Focusing on getting good deals and saving money can take you away from the true thrills that God gave you – your family, and finding peace with Him! It’s always good to have that as a constant reminder!

  • Blakely says:

    I have worked with the envelope system for over 3 years with my groceries and love it. It does take some time to get used to, but now I wouldn’t have it any other way.

  • Angela says:

    Thanks for this post! I haven’t done the envelope system yet because it didn’t seem like it would work well for our situation. I never thought about doing it for some parts of our budget–I don’t know why I never thought of that but oh well. Now I think I will try it for the grocery/household goods part. Also I’ve been wondering as I get into couponing, if people spend all their time chasing deals and how much it really saves. Thanks for the perspective as I try to decrease our cost of living AND maintain sanity.

  • B says:

    Excellent post! We’ve been using the cash system for the last 7 years (inspired by Larry Burkett) and pull out our cash for the month at the beginning of the month, then distribute to each category and keep in files in my wallet by category. Some of my friends use a coupon holder for this purpose. We use it for groceries, toiletries, household items, lunch allowance, dining out, etc. My husband loves it because he gets a set amount of allowance for his lunches.

    This really helps us limit our visits to the ATM and keeps us on the same page on our budget.

    We still use cc for large purchases and for gas (since we get 5% back rebate on cc for gas).

  • Shelley says:

    I have been budgeting and using the envelope system for more than 8 years now. Writing everything down on paper and giving all of my money a place to go makes a huge difference. As soon as I get paid I distribute every dollar to its proper place. The items I put cash in envelopes for include eat out, groceries, gas, nails(I get a manicure every 2 weeks), me money, my husband’s blow money, and gifts. I have been couponing for 2 months now and I actually have a great deal of money left for groceries this month ($130). I usually spend every bit. Living debt free is the only way for us. Using cash is a major part.

  • maria says:

    I think you need to do whats best for your family. I have done the cash only system and just using my debit card and can say it is easier of course to go over when using my debit card.

    As for a certain amount per week, that is harder in my area, b/c we have winn dixie and walmart only. 1 smaller store but they are high on most items. Great for last minute items though.

    Today I went to walmart got at least 10 bags of items that I had coupons (stockpile items or freebies)with a few extras like milk…hot dogs etc…and spent only $26!!!

    But I may not be able to do that again for another month or so, but spend at least 60 or so a week.

    Seeing how I used to spend $150 a least a week, thats a huge differnece.

    For me if I do use my debit card, I have a mental tracking of my checking balance/spending budget. The rest goes into saving so we dont spend money not needed in our budget.

    My big thing is that at least I am conscious of how much we were spending vs what we spend now.

  • Jessica says:

    This is a great way to start- I have been wanting to do envelopes but it seemed so hard before. You also make some good points- buying staples first and the true OOP expense of things. Thanks!

  • Sheila says:

    Great tips. I have been doing the envelope system for about 6 months now and it works great! It certainly makes me stay with in my budget. Oh, and I don’t carry a debit card with me either. It keeps me from cheating!!

  • Kelly V says:

    We started using the envelope system this year as recommended by our Pastor and his wife. At the beginning of every month, I add up our bills and I place that money in the bank (I do all online billing). After that I take out the money we need/have available for our food, doctor, dates, gas, home, tithe, and extras envelopes. Many months the $$ doesn’t seem like enough for the envelopes, but the Lord provides-and the money goes much further than expected. This system has really helped us to see where we spend money and it has helped us to prioritize our spending. Before this system, we were eating into our savings every month. We have only made that mistake once since starting this system back in Feb!! I definitely recommend trying it – especially if $$ is tight for your family.

  • Julie says:

    Love the envelope system. Having been doing it practically my whole life (I’m a wee bit paranoid of debt!)

    The biggest challenge is to get hubby to stick to his allowance. Anyone have tips for that? We have a fairly large income and flexibility in our budget, but it burns me up that he so easily runs thru his allownace and swipes the cc without thinking. How can I get him to buy into the system more consistently?

  • Lynette says:

    I’ve been using an envelope system since the beginning of the year, and I have consistently saved 15-20% on our groceries. My old method using a cc was to keep up with receipts to enter into Quicken and then every few weeks take time to out what we had left in each category. Most of the time, we had overspent everywhere. Now it’s easy–if there’s money in the envelope, I can spend it, but if it’s not there, I don’t. This also keeps down on all the clutter by my desk–no more piles of receipts everywhere.

  • Megan says:

    We used cash-only for the year we lived in Kenya and, while it was ok for small things like going to the market, I always felt nervous walking home with rent money in my pocket. Credit/debit cards are SO much safer and were one of the few things I missed. I’ve definitely thought about trying an envelope system for food/petrol here in the states. It would be fun to see if I actually do save more with that way. But I simply refuse to keep more than $50 in the house (or on my person!).

    A question for those of you who use the envelope system for everything: How do you pay your utility bills? Do you send an electronic check from your bank account? Or do you literally pull out cash for those expenses? (not sure how that works!)

  • Jennifer says:

    I recently started following Dave Ramsey’s program that includes the envelope system. I am still in the process of adjusting my budget, but the envelope system has let me see where I can spend much less money, as well as the areas I need to budget a little more for (gas). It has definitely already saved me quite a bit of money. I plan to stick with it.

  • Theresa G says:

    We just started following Dave Ramsey’s Total Money Makeover Plan and this is my first week of the cash system with envelopes. Can’t wait!

  • Marie says:

    Great post! I really need the motivation to get started doing the envelope system! I do have a question though. Recently I found a really good deal on ground beef. Because I bought so much it basically used up what would be my weekly grocery budget. Yes, I spent $40 on meat, but now I won’t have to buy meat for at least three months. How does buying in bulk work on a budget? Thanks for the help!

  • Crista says:

    We don’t use the envelope system, but we do use cash only for just about everything. We no longer have a checking account and we use a pre-paid credit card for any online purchases or bill paying. It sounds drastic, but I think getting rid of the checks and the debit card and converting to all cash has saved our finances.

    It is awfully easy to overdraw your account with a debit card or to “float” purchases when it is just a couple days before payday and you are DESPERATE for pizza. We used to do this all the time and wonder why we were broke when both of us had good jobs and we felt like we really were living below our means.

    I sat down with our bank statements and did the math one day. Holy Moly! We were spending almost 200 dollars PER MONTH on overdraft fees and late charges! We decided to do something drastic and got rid of the checking account. We still have our savings account for my husband’s direct deposit, but, honestly, we don’t miss the checking account.

    And it is such a nice feeling to get a paycheck and realize that is ISN’T spent before we get it. And we aren’t drowning in fees. Most of our family and friends think we are crazy, but honestly, it just simplifies our life and helps keep our finances in line.

  • Katie says:

    We do envelopes for everything except gas (with two littles it’s easier to use a debit card and pay at the pump). When we make online purchases with the debit card, we take money from the appropriate envelope and move it to a “savings” envelope, which we draw from instead of the ATM the next week.
    This system has saved us so much money because it prevents me from overspending on food, clothes, and items for our home. It also saves me a tremendous amount of time to realize that I don’t need to hit every sale.
    My own experience with executing our household budget in the last year has been a lesson in buying less. It’s the answer to most of my consumer woes. Watching the budget? Buy less. Care about the environment? Buy less. Overwhelmed by clutter? Buy less!
    And cash-only helps me do just that.

  • Katy says:

    I’ve WANTED to try the envelope system, but I just can’t give up my rewards credit card! Without paying a dime of interest, we manage to rack up enough points every few months to put a $100 payment towards my school loan. And I know that we would probably spend a bit less overall if we didn’t swipe a card when buying things, but I don’t think the savings would outweight that $100 bonus.

    Thoughts on this? Has anyone compared the two?

    Money Saving Mom here: Unless someone is a meticulous budgeter and ultra frugal, I think you would usually save at least a hundred dollars every month by switching to cash and learning the self-discipline it requires. And most folks would probably save quite a bit more than that. I would encourage you to try cash-only in certain budget areas and see what the results are.

    Perhaps you could challenge yourself to try to stick with a certain amount that is a little lower than you usually spend and then save all the extra pennies and dimes and quarters you have leftover from paying with cash in a jar. Do this for three months and then tally up your savings at the end and see if it amounts to more than $100. You just might find you save quite a bit more by using cash than those free points from swiping earn you. I know we certainly do!

  • This was a great post… and one I needed to read. I’ve been pretty good about using a cash-only system for most purchases (I find that is easier to use a debit card for gas: you don’t need to haul the whole family into the gas station with you, you can fill the tank rather than just prepay a set amount. etc.) but lately I’ve gotten a little lax about it. I just looked at my bank account online and was shocked at how much $11 here and $20 there had frittered away our account balance! Back to cash!

  • Stacie says:

    We’ve been on the cash only system per Dave Ramsey’s instruction since January. To me, it’s the only way to go anymore.

  • Beth says:

    We use our own variety of the envelope system that doesn’t actually include envelopes. 🙂 We do the debit card thing – my husband I each have a debit card – we’re both on both accounts, we just use one for groceries/gas/incidentals and one for everything else (bills, mortgage, etc). So each pay period, my husband puts my grocery/gas/incidentals allotment for the two week period into “my” account. And I determine how best to use the money. What I always do is take out a certain amount in cash right away, and that goes into my savings – I keep a cash stash that we use for small things we need for the house, extras for the new baby coming in a few weeks, a treat for the kids, a movie out with my husband – that sort of thing. And then I work really hard to have a certain amount left in my account at the end of the two week period as well. Whatever is left (sometimes it’s $10, sometimes it’s $40 or $50 – depends on how many doctor’s copays and/or medications and/or household staples I stocked up on) goes into my cash savings too. So far I’ve got several hundred saved in my cash stash, and that will be kept for a rainy day. We’re in the process of growing our emergency fund, but the cash stash allows me a bit of freedom for something that I deem an emergency that really isn’t an emergency, like wanting to paint the new baby’s room. 🙂 Anyway – when my money is gone for the two week period, it’s gone – there’s no way for me to go over since there’s a set amount put into the account every two weeks. If I go over, I’m overdrawn, and that’s never happened. So! I love the “debit envelope system” … works great for us.

  • sara says:

    Great Post…I’m wondering, do all of you who use the envelope system use regular envelopes, Dave Ramsey’s envelope system or something else? I have been really wanting to start using the envelope system, so this post was another push that I needed! Thanks

  • I really like this system. I posted it to my blog with a link and credit to here. I hope my readers will read this too

  • Jill Baugh says:

    I love this post and wanted to say something to Jenny, the author. I am so impressed at your willingness to try something new in an effort to be a better steward of your resources, and therefore a better (more productive) wife and mother. I especially love that you went a step further with it and wrote a post about it to share with the rest of us. In reference to your faith in the Lord and his provisions, I totally agree. After reading this I really wanted to tell you that you are a great example of a Proverbs Noble woman (Proverbs 31). Good Job and Thank you for the inspiration! Absolutely Brilliant.

  • Emily says:

    I feel like I also use the “debit card envelope” version mentioned above. I use my debit card, but we have a strict budget for groceries or other categories. Every time I use my debit card, I subtract it from the certain category (excel spreadsheet) and know exactly how much I have left for the month. Once I reach zero.. I don’t spend anymore in that category! I guess you might have to be more disciplined when you do it this way or you could just use your debit card again, even after you are technically out of money in a category…. but whose to say you couldn’t just go withdraw more cash if you were using the envelope system?
    I feel like it works for us because we are very disciplined and stick to it!
    PS: I would love to see a post or list of how much everyone spends on groceries/household items per month! I am just AMAZED that someone could spend $150 a month! Please tell me it’s only for 2 in a household! I feel like I am pretty strict about what we buy and our budget for a family of 5 is $450/month for all groceries and household items! Is that high for someone using coupons etc??

  • JulieJ says:

    I have been using the envelope system for a year and use the Dave Ramsey envelope system. It’s easier than carrying a lot of individual envelopes. AT the beginning of the month I withdrawal from the bank a large amount of cash and stock all my envelopes: home improvement, groceries, restaurants, gasoline, clothing, haircuts, gifts, husbands’ mad money, and entertainment. Many people are leery at first about taking out a chunk of cash. Ramseys says there is a greater chance of overspending than being robbed. I used to drive throught the ATM everyweek but that got to be too time consuming. WE also pay all our bills online from our checking account: tithe, gas, electric, phone/Internet, 529 (College), Roth IRAs are all automatically deducted which helps me stay within budget. It works first us and I would advise everyone to try it beginning with just a food budget envelope and then adding more envelopes each month.

  • amy says:

    Oh, man, gang- I am terrified of the envelope system…which means it must be time to rise to the challenge! Maybe I could start with the average amount of cash I am spending per week on groceries (summertime really messes with my budget, so don’t know the current amount off the top of my head what with farmer’s market produce and an occassional last-second stop on the way to the beach) I know it has to be waay more than the $40 though.

    So- do you do all the math in your head at the store or what? ? ?

    I usually have a 10mo old and a three year old with me so it is pretty hard fo rme to do the shopping at all somedays. Ocassionally, I ‘ll whip out my cell phone calculator to figure out what the best price is fo rcheese or soemthing, but to tally up my weekly or biweekly trips to the store while I shop sounds near-impossible.
    I really respect you guys for making it work. Maybe I’ll talk it over with DH- he’s great at math, and I kind of want to give it a shot.

  • Carrie says:

    We use the envelope system–actually, I keep it in an old recipe box because it has dividers 🙂
    This system has saved our lives during the time I’ve been off work since the birth of our daughter. We have all the standard categories–groceries, clothing, etc–but also added in some fun stuff like “date night” and “toys and candy.” These small little treats help to keep our sanity as we try to be as frugal as possible.

  • Dana says:

    We have been using the envelope system since April (I started couponing at the same time). We use a separate envelope for groceries (including health, cleaning, and cat), my allowance, hubby’s allowance, kids needs, eating out, house, auto, birthdays, kids gifts (holidays, etc), & family fun. All our other expenses such as mortgage and utilities are budgeted for and automatically deducted from our checking account. Our grocery budget is $400 month (spent $600-700 before!) Now that I have a good stockpile I am reducing to $360 and hopefully can go down from there with a family of 4.
    Thank you, your site has been a tremendous help!

  • Jan says:

    excellent guest post!

  • Patricia says:

    I once tried dividing up money for each category, but it just never worked for me. Now, each week, I take out $280 in cash, and that is what I spend for the week on everything, except gas and monthly bills. Groceries, entertainment, eating out, clothes (for the most part), going to the museum with my daughter, paying the babysitter, it all comes out of that. For clothes, we do sometimes decide we need to just spend a chunk of money outside the budget, but I try to stay in it. Plus, if there is some large item that we need, that would come from other savings.

    If you really like the rewards card points, you can use it to pay the monthly bills (although sometimes they won’t let you). That way you are putting a fixed amount on there, and it isn’t about uncontrolled spending.

    I was hesitant to say how much I spend each week, since it seems everyone else spends so much less, but I finally decided to just admit it (also, family of three). With this method, I see the amount of cash I have at all times and that usually slows down my spending. I also don’t have to worry about tracking categories. Plus, if I really want a magazine or something, I just get it without feeling bad about it.

  • Melissa says:

    Thank you so much for helping me to refocus. As a new stay at home mom I am learning a lot and needed to be reminded that God is the supplier of all of our needs. I need to focus on Him more and not so much on the “deals”. We are great savers. I used the envelope system in college and for a few years after. I think I need to try it again.
    Thanks for the encouragement.

  • Beth Long says:

    Thanks so much for this guest post. I think that the sentiment of self discipline was outlined really nicely- something that Money Saving Mom often has as an underlying tone, but here the explicit outline here was really nice.

  • Kristy says:

    We’ve used the cash system for years. LOVE IT! (We pay all regular monthly bills online with our debit card account.) When the cash is gone, the cash is gone. I always make sure to purchase the staples (including 3 different sizes of diapers!) first and then choose my sales/coupons carefully. I think seeing the cash dwindle from my wallet each week helps me spend it wisely…and helps me see how wonderfully the Lord provides for us. Great guest post…I couldn’t agree more. (Especially about the OOP thing. When I read someone’s blog and they say it’s free or a money maker…I say, “Not for me…that’s $$$ that has to come out of my pocket…can I afford that this week? If so, it’s a great bonus for next week when I use the catalina or whatever!)

  • Creative Triplet Mom says:

    Wow I am amazed you are only spending $40 a week. That’s only $160 a month. We are a family of 5 and I spend $160 in one week and that’s with using coupons. I’m going to try to cash only system but just don’t know how much to take out. Do you buy meat? My husband has to have meat at every meal. I’ve been trying to not spend over $5 a meal and getting meat when it is on sale and stocking up. I found ground beef for 99 cents once and chicken 40% off. That’s when I buy a lot so it lasts for the month.

  • Diana says:

    This was a great post. I’d like to use the envelope system for groceries, but unfortunately (fortunately!) I get food stamps. So it takes mental willpower to not overspend like I did this month, when I spent $22 on rolls and pizza strips alone! They were for my son’s party, but I should have realized that by the 22nd, I’d run out of money and have to hope that the food left in our house would suffice. It has, thank goodness!
    I think that this post, in conjunction with the post a while back that boiled down to “it’s not how much you save, it’s how little you spend” are really helping me to take control of my money again. Especially in these very, very hard financial times.

  • Lesley says:

    I am starting the envelope system with bills, but not with groceries. I used the debit card for that and it works good for us. We have a budget, and just like using cash I don’t go over the budget. If I do then I have to put items back, which is a very rare thing.

  • Carrie says:

    We have used the cash only system for over a year now. Before we did, we also did the floating to the direct deposit and hubby forgetting to give me receipts and so on. We lived above our means. Now we actually have money in our “savings envelope” and we took our first ever family vacation this year. We also have paid cash for 2 vehicles in the last 2 years. We can buy things we need if we “need” them. We can even splurge if we choose which we choose not too alot. We have no debt, we are currently renting to start afresh and plan on buying in the next 2-3 years. We would be in so much trouble if we hadn’t started over 2 years ago and then then did the cash only system. God has showed us many things by living this way. It has also taught all our children how to live more frugal. They love being able to say we saved this much and guess what this is it we don’t have anymore money to spend this month or week on this. I praise the Lord for showing us what was right for us. Great post!

  • Dana says:

    Thanks so much for posting this. It is by far the best explanation of the envelope system that I have ever seen, as far as it’s benefits.

  • Rebecca M. says:

    What a great post! My husband I started using an envelope system for everything except bills for the last 6 months, and it has worked great! The only problem I have is when I purchase items online. I have to use a credit card for these purchases, then re-deposit cash from that envelope into the bank account to pay the credit card bill. However, that’s not been too big of a problem so far.

    I agree with others about the super-coupon rush. I started couponing 2 months ago, and lately have felt like I am too obsessed with the “savings”, chasing deals around town. I’ve decided to only buy items I want/need at the 3 stores I shop anyway. Instead of hoarding coupons for items that might be “free” in the future but that I’ll never use, I’m using an online coupon group to trade them for coupons I DO want or need.

    That way, everyone wins! 🙂

  • jennifer says:

    Thank you!! I have been couponing(with help from hubby) for the last 5 months. It has made things much better for us since his paycheck is variable. But I also fed off the feeling that I could get all this STUFF for free. I still ended up feeling short. You reminded me that my security is not in a paycheck, or my ability to get free stuff, but the Lord. Thank you!

  • J. Serre says:

    Kelly V~sounds like my hubby. It was too tempting for him to not just swipe the debit card… so he stopped carrying it with him!! That way he has to actually plan ahead and have the cash, it has saved us TONS!

    I’m inspired by all of these envelope success stories! I think I will give it a try and just start in one area- groceries/household/hba/toilet paper, etc.
    I would guess (?) it should work pretty well since I have a great stockpile I should have plenty of $$ to get the necessities (eggs, fruit, veggies, milk) and stay on some of the deals

  • Annie says:

    Thanks for this reminder. I’ve found, like many of the commenters, that coupons/deals can be consuming. With the addition of our second baby, I have far less time to spend on finding deals and going store to store to get them. I’m trying to let go of some of them. I’m also trying to remember that it’s not MY money I’m spending, but God’s. I’m trying to create a habit of praying before entering a store that He would give me wisdom on what to buy and what to pass on and that He would give me favorable prices on things we must have to make the most of His money. With a few changes, God has helped us cut our grocery bill (for our now family of 4) from $350 a month to $175 a month. Thank you, Jesus! I’ll be trying the envelope system with just our groceries as a discipline tool to become a better steward of the money to which we’ve been entrusted.

  • eve k says:

    This is for Kelly but can help anyone who does not always see eye-to-eye with their spouse.
    I used to be the overspender in our family. The more my husband nagged me, the worse it was….because we both work and bring home the same amount of money, I felt he was trying to deprive me or control me in some way…
    When he stopped nagging or even mentioning it….all of a sudden “I” got the idea to get into couponing about a year ago. Since it was “my” idea and more of a challenge/hobby, it was fun. Now it is almost a contest with us–who can find the best deals. We have put the savings into a special account to save for some specific items that we have wanted.
    If there is a way that you can get this to be a challenge or contest (in good fun of course), you may have more success.
    I still go over my budget sometimes, but we are still saving at least $5000 per year (not kidding).

    Cash is the way to go for a bunch of reasons. Not to go on a tangent, but the credit card companies and banks are tracking your purchases and predicting your credit worthiness based on what you buy! NO thanks! We pay our bills on time, so I don’t think some computer should decide that I am a poor risk because I bought beer this week or stocked up on toilet paper last week! Sheesh.

  • eve k says:

    I just want to add that I am amazed that someone feeds a family on $40 a week. That is awesome.
    Before I started budgeting and couponing, we spent so much on food (2 adults and one dog)–I don’t even want to tell you. My husband says I used to spend $800 a week but he is exaggerating. The truth is, I shopped at the closest store, did not have a clue what things should cost, shopped when I was hungry, tired and stressed at the end of the day (absolutely the worst scenario!!), etc…
    It was probably $400 a week for the two of us.
    My husband also needs meat at every meal and has to have his certain junk food snacks, but I have my own idiosyncracies (organic stuff, splurging on occasional pricey ingredients to make a special meal) so we are now down to $100 per week. We really have not suffered from a change in lifestyle–we eat just as well or better but just get more bang for the buck.

  • Rachelle Burkhead says:

    We have been using an envelope system for years. My husband and I got married while I was still in college. We have never actually seemed to make enough money. We still don’t. With the help of family, we are getting by.
    I was introduced to Crown Financial Mvelopes system. It is totally online and it is attached to your bank account. Every transaction shows up in a window and all I have to is click on it and drag it into whatever envelope it belongs to. I have created a budget on there and allocated certain amounts for each category. We pay all our bills online through our bank. When they show up, I just drag it over to the proper envelope. You can begin the month by funding every envelope with whatever amount you have allocated. You can see throughout the month how you are keeping on track. I really don’t like paying cash for things. I actually don’t usually carry cash at all. This way, I can’t make small, senseless purchases just because I have a little cash in my purse. Every purchase has to go into an envelope. It is basically the same as using real envelopes but I can keep records of my purchases without having to carry around cash.

  • Jessica says:

    We went through Dave Ramsey’s Financial Peace University this year and the Envelope System has been great so far. When the budget is mutually agreed upon, the cash is so freeing! I can buy clothing or groceries or school supplies without guilt. I can also say no to my husband or kids without blame other than to the envelope. My kids (7 and 5) have now learned that when the money is gone from the envelope, it is gone. There is no going to the magic machine for more until pay day! The cash also is a great visual barometer of how we are doing for the month-especially for those things we don’t buy every week such as home or auto repairs. For many things, I have a spreadsheet divided into “envelopes” of which I just deposit into a combined account which is great to see them grow (for Christmas, Vacations, etc.). We divide our cash flow into about 15 envelopes (virtual and real) which can be a bit much at times, but is working for us. We know where every single dollar is going! I LOVE the comments about going coupon and deal crazy! I think everyone does that when they start out. We are part of that Razor-craze and going through so much paper and ink to print coupons that you spend more on coupon supplies than the coupons are saving! Now, things are becomming more even and so much more worthwhile! Thank you MSM and all of you who participate in this adventure!

  • Christy Carden says:

    I am terrified of the envelope system; mainly because we are terrified of carrying around that much cash. I know the chances of being robbed are less than the chances of overspending, but please tell that to my husband, who is paranoid anyway and HAS BEEN robbed at gunpoint (only had about $40 cash in wallet at the time, but later had identity stolen as result of people getting hold of picture id, etc.). I am also extremely ADHD and have a hard time keeping up with things and am afraid that I will lose an envelope/a few dollars change that I didn’t stick back into the envelope immediately because the 2 year old is screaming in the grocery line so it ends up in my pocket, etc. One plastic card is a little easier to keep up with. I think we need to try the “virtual envelope” system with the spreadsheets.

    Just a thought about the OOP expenses/”free” items. I have been thinking about this a lot lately as I should be getting several rebates in the mail and it seems to be taking forever for them to come! Maybe you could start a seperate envelope titled, “free” deals. Put a certain amount of start-up money in it $10, $20, $40, whatever you want — maybe start it up one month when you have leftover $ from another envelope like groceries. Then use the cash from this envelope to pay for the “free” item. When the rebate comes in the mail later, you can cash the check and put the cash in your “free” deal envelope to use on a future purchase. In this way, you will constantly be rolling over your rebates, but sometimes will have to pass on an item if you have no money in the “free” deals envelope at the time. I would just hate to pass up free items (free in the long run, after rebate) if they are items that I would buy anyway (shampoo, etc.) or can donate. Eventually getting the rebates and rolling them over should help to spend less out of the grocery envelope—just a thought. Of course, this would only work for cash rebates, not things like CVS Extra Care Bucks. I had to use about $10 to start that up, but now I just roll them over and spend nothing OOP. So that may need to be seperate and you budget some start up money for that too one month when you are under budget on groceries.

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