In need of a serious money reset? Going back to cash could be the cure for your ailing budget.
Popularized by modern personal finance patriarch Dave Ramsey, the cash envelope system encourages you to toss aside your wallet and rely on pre-labeled envelopes full of real, physical money.
You don’t have to use this method for your fixed expenses, like your rent or mortgage, car payment or debt payments. You can automate those recurring expenses, since you’re likely required to pay the same amount on the same date each month.
Your water or electric bill may fluctuate from month to month, but treat it like your fixed expenses. You’re unlikely to go on a splurge and overspend on your utilities. And because utility bills are based off usage from the previous month, you can’t lower your bill by deciding to use less water or electricity in the month you’re currently in.
You also don’t have to mess with any auto drafts for saving or investing. You aren’t going to benefit by taking money that would be earning interest in your retirement accounts and setting it aside in a cash envelope.
Instead, you’ll use cash for areas where the amount you spend can vary: gas, groceries, weekend adventures or clothing, for example.
It’s those variable expenses that often cause people to blow their budgets. But the cash envelope system is designed to keep budgeters on track by having a finite amount of money to spend.
You also don’t have to mess with any auto drafts for saving or investing. You aren’t going to benefit by taking money that would be earning interest in your retirement accounts and setting it aside in a cash envelope.
Instead, you’ll use cash for areas where the amount you spend can vary: gas, groceries, weekend adventures or clothing, for example.
It’s those variable expenses that often cause people to blow their budgets. But the cash envelope system is designed to keep budgeters on track by having a finite amount of
