Let's talk savings!

Change Your Habits

Most people find it challenging to save money on a monthly basis. However, you have to find ways to not just save money on purchases but also to find innovative ways to put money away each month.

Envelope Method

Want to keep more of your hard-earned cash? Try keeping your money in cash envelopes. 

The envelope system is a way to track exactly how much money you have in each budget category for the month by keeping your cash tucked away in envelopes. At the end of the month, you can see how much cash is left by taking a quick peek in your envelope. How easy is that?

If you’re constantly going overboard in a certain category (hello, food!), then take cash out for the amount you’ve budgeted for and stick it in an envelope. When you shop for that category, only use what’s in your cash envelope. Once the money is gone, it’s gone—so this will force you to stop overspending and help you achieve your money goals faster!

How the Envelope System Works

One of the reasons we overspend is because there’s nothing telling us when to stop. That’s where your cash envelopes come in. They’re a great tool that will help you stick to your budget. Here’s how to use them:

1. Think of the budget categories that need a cash envelope.

It’s a good idea to use the envelope system for items that tend to bust your budget. Think of things like groceries, restaurants, entertainment, gas and clothing. 

You get to decide which budget categories get an envelope, but here are a few I find most helpful:

  • Groceries
  • Restaurants
  • Gas
  • Medicine/pharmacy
  • Hair care/makeup
  • Car maintenance
  • Personal
  • Entertainment
  • Gifts

If your budget does not included the listed suggestions above, you can customize your envelopes.

2. Figure out your budget amount.

If you know you tend to overspend on things like baby showers, birthdays and impulse purchases, then look at limiting that to a certain amount for the month. If groceries are always zapping your cash, figure out how much you want to spend on them and then stick to it!  

Make sure you and your spouse are on the same page with the budget amounts. And if you’re single, recruit an accountability partner who is committed to holding you to your budget. This could be a friend, family member or coworker who you trust and know is on board with the money principles you’re putting into practice.

3. Create and fill cash envelopes for the budget categories.

Let’s say you’ve budgeted $500 a month for groceries. When you get your first paycheck of the month, take out $250 from your bank account and put the cash in an envelope. On that envelope, write out Groceries. When you get your second paycheck, do the same thing again and put that $250 in the envelope. That’s your $500 food budget for the month.

Make sure you take enough money with you to cover your groceries for that trip. If you take $150 cash and your total comes to $160, take some things out of the cart and put them back. I know, I know—it’s hard! But it’s better than going over on your grocery category and busting your whole budget for the month!

And on the flip side, if you don’t spend all of the money from the groceries envelope when you’re at the store, make sure you put any change you get back in the cash envelope.

4. Spend only what you’ve put in each cash envelope.

Don’t forget: When your money’s gone, it’s gone!

Advantages to Using Cash Envelopes

  • It keeps you on track.
  • It enforces discipline.
  • It holds you accountable.
  • It makes it pretty hard to overspend.

What if I Have Money Left in My Cash Envelope at the End of the Month?

If you have money left in an envelope at the end of the month, congratulations! You came in under budget! That’s the best feeling in the world.