It’s time to talk about CASH!  We’ve been able to spend the last two years furnishing our home from scratch, landscaping the back yard, and getting set up for a baby.  Now that those goals have been met, not only do we need to plan for the expenses that come with expanding our family, but next year we’re going to be getting very aggressive about paying off our mortgage!  This is exciting!  I know…we are nuts.

When we did the calculations to find out how much we’d need to save between now and February, reality hit.  So we came up with an savings plan to get ourselves where we needed to be financially (as the new minivan fairy is out of business due to the economy).  I took my budget spreadsheet to task and started cutting some of the fat.  We named ever dollar and told it where to go.  As a result, I knew it was time I dig up my long-lost Financial Peace envelope system.

I love cash envelopes because studies show that when you are forced to hand over cash, your brain registers the pain of the transaction!  It’s like a game to see if I can come in under budget at the end of the month. I always spend less and am far more mindful of my budget when I’m using cash. The majority of our fixed monthly bills are debited directly from our account every month, so my cash envelopes are dedicated to only those monthly expenses that can vary.  Here are my cash envelope categories:

• Groceries: This category isn’t as slim as it’s been in the past, due to spending a little extra on organic foods.  That’s okay.  Menu planning  makes all the difference in the world!
• Eating Out: We allow ourselves to eat out once a week.  Anything else would be unrealistic!  We usually go to Chipotle on Friday night.
• Hair and Nails: This category was cut, no pun intended!  I had to let my stylist know that I would just be coming for cuts, no more color.   Every other month I’ll have some cash for a pedicure.
• Toiletries and Cosmetics: This includes all of our monthly toiletries and my make-up.
• Clothing: I’m trying to do this on a very tight budget, when you consider I’ll be stocking up on some new maternity items and clothes for my growing girl.  Sounds like I’ll be shopping in my closet and hitting up consignment and thrift stores.
• Miscellaneous: For the random, yet crucial items, like organizing bins!
• Fun Money:  David and I both get a small stipend, depending on our goals that month. You can spend it right away, or save it up for a bigger purchase.  Mine usually gets used for home decor or clothes.  (My stash will be going towards fall boots, and yes, I’m already saving!)
• Gifts: Between birthdays and holidays, we usually have some sort of family birthday or occasion once a month, if not more often.

Some tips on using cash envelopes:

• Be realistic.  When I first started using the envelopes, I scanned our bank statements and did a survey of our expenditures over the previous few months.  I used that information to help me make a challenging, yet attainable budget.
• If you can, work in some fun money.  I swear, this is the key to it all.  Believe it or not, this helps us stick to our budget better.  Like a diet, you don’t want to over-deprive yourself and end up binging.  When we were getting out of debt, we each had fun money, even if it was just $25 a month.  It helped us to feel empowered, and not deprived.
• Be flexible from month to month.  Re-evaluate on a monthly basis.  Look at your calendar.  What is going on this month?  Are there holidays?  A big birthday?  Your numbers do not have to be the same from now till eternity, and there is no “right” amount for any one category.  As long as your budget balances to “$0.00,” you can work this however you want.  Once you set your budget for the month, THEN it is set in stone!
• Just take out what you need.  I don’t recommend walking around town with all your cash envelopes stuffed into your bra.  If I go grocery shopping, I just take the grocery envelope, or sometimes just a few bills.

Ours looks like this and it was purchased off of Dave Ramsey’s website.  I don’t use mine as my wallet, because like I said, I don’t recommend carrying around a ton of cash these days.

While I love me a little Dave Ramsey, there are some ridiculous cute cash envelope systems out there that I just might need to make with my big book o’ craft paper or big bin o’ fabric scraps.

Or you can go old-school and JUST DO IT with some good ol’ business envelopes and a Sharpie!

However you do it, envelopes are a little extra work and organization, but it’s only once a month.  If you want to get hard core, the cash envelopes are the way to go!

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