THE CASH ENVELOPE SYSTEM

   What is the cash envelope system?  It just that. Envelopes with cash in them.  A lot of people swipe a card, and do not know at the end of the week or month where all their money went. The cash envelope system gives you control over your money instead of letting your money control you.  When you hand over cash, it makes you evaluate each purchase.  Dave Ramsey's website(http://www.daveramsey.com/ ) gives lots of help.

   Let me explain how I do the cash envelope system.  I personally do not use envelopes.  I have a small purse that came with a larger purse when I bought it.  In that small purse, I have 6 unlined index cards.  On each index card, I have written 6 different, designated expenses.  I do not use categories like regular monthly bills that are paid online or in the mail.  I only use categories where I can use cash.  They are has follows:

1. Groceries
2. Dept. Stores
3. Hubby's money
4. Gas
5. Entertainment (eating out, anything fun)
6. School tuition (I do pay this with check)

 Also I have written on each card, the amount that I put in for each week.  Each Monday is bank day. I write a check to cash for my week's cash money. That is divided into my fixed pockets. Then when I go to the store, my money is there.  I used a combination of what I spent last year (using Quickbooks on my computer) and what I think I should spend to decide what goes in each pocket.  If you do not track your expenses, you can write down everything you spend for a month or so to give you an average amount.  Dave Ramsey has budgeting forms here. You will have to make adjustments until you can make it work and it will also take several months time.  Do not give up. 

I started using this method in March, 2010.  I have had to make a few adjustments of some of the amounts along the way, and now I really feel comfortable with how it is working out.  I am not perfect with it either, but I have found that my categories do not get empty like they did in the beginning.  I also do not think of it as a budget, even though that is exactly what it is.  Keep an open mind about it and it will work.