If you google “how to manage money” you get this:
About 498,000,000 results (0.45 seconds)
I don’t know about you, but I do not have the time to go through all of that information!
So, I’m just going to tell you what MY #1 way to manage money is and save you some time.
I use something called The Cash Envelope System.
I learned this system going through Financial Peace University and I still use it today – eight years after we started our journey to get better with money. My biggest issue with money is impulse spending – side note: I recently heard on a rasio sttion that people spend $5,000 a YEAR on impulse buys! – and the Cash Envelope System helps break this habit.
Here’s how it works:
1. Get an envelope – I like the ones from the bank because they fit in my wallet.
2. Determine the amount of cash you need for a specific purchasing outing. For example, if I am going to Costco, I would put $400 in the envelope.
3. Get the cash and put the cash in the envelope.
4. Go on the purchasing outing with ONLY the cash in the envelope!
This is the HARDEST part because if you use the cash and your debit card, you are defeating the purpose of this technique.
5. PAY ATTENTION to your spending. I like to keep a tally by rounding up to the nearest price and adding up as I go.
6. Pay with cash at checkout.
7. CONGRATULATE yourself for coming UNDER budget because you should have at least some change leftover!
You can use this system for almost anything you spend money on –
Here’s a personal example. Over St. Patrick’s Day weekend, my youngest son and I went on a trip to New York City to see the parade and watch Frozen on Broadway.
I explained to him (he’s 11) that we had a budget for the trip AND not to freak out because everything is SO much more expensive there than at home. I had planned accordingly.
I told him how much cash we had to spend each day ( we were there 1/2 day Friday, all day Saturday and we left Sunday morning) and showed him the envelope.
I don’t discuss my own personal numbers except for the amount of debt we paid off ($43,544) so here’s an example: $150 cash – mixture of 20’s, 10’s, 5’s and 1’s.
Every time we made a purchase with cash, I got a receipt and put it in the envelope. At the end of each day, we tallied the receipts and the cash. ( I had also kept a mental note of the amount we were spending).
One question I get asked a lot is how I feel walking around with that much cash?
In this case, I had it separated out in my wallet so when I opened my wallet, people didn’t see a wad of cash there. If I needed to move money around, I went to the bathroom and did it in the bathroom stall. I also didn’t carry all the cash on my person at all times.
For something like a trip to Costco, I go to the ATM closest to Costco, get my cash and go directly to the store. I also use this system when we go out to dinner, the movies, etc. It helps me to not get caught up in the moment and buy all the things!
Using this system has not only helped us to stay on budget BUT it also helps to break the habit of impulse buys because I don’t have the money to spend on them!
Additionally, I often get change back that I put in my jar to save for our next adventure!
Do you have a favorite way that you manage your money? I’d love to hear about it and maybe I’ll feature it in a future blog post!
Do you need help managing money?
It’s almost the end of the first quarter of the year – if your financial situation was playing a basketball game, how’s it looking right now? If you don’t like the “score”, reach out to me via phone, text or email and let’s discuss how I can help you!
#dreamsmatter Pursue Them!