This is such a simple, old fashioned way of budgeting, but it works! Spreadsheets and debit cards linked to a multitude of bank accounts that you can update via your smartphone may be the modern way of budgeting, but it has its downside.
When Disaster Struck and we had no money coming in, we switched to a cash envelope system and I still use it for the housekeeping today. It works, it's convenient and it's simple so why change it.
Switching to a cash budget and then using envelopes (or separate purses or ziplock bags or whatever) is a very tactile way of managing your money. If you, like me, need to be able to actually see and physically control your money, envelope budgeting may be for you, as Cheapskater Amanda found out.
We Are Saving Money Using EnvelopesApproximate $ Savings: $50-$100
We find using the 'envelope' approach helps us save so much money. We live on one wage so have to watch our budget. Now when we get paid we have money transferred straight in to specific bill accounts to cover weekly and fortnightly payments like rent etc, as well as money transferred in to a savings account, so we don't actually see this money and payments are covered.
Then I take out a small amount to cover food, petrol and weekly spending money for my husband and I. This cash I withdraw goes straight into labelled envelopes or labelled plastic seal money bags, and then means I only ever pay for things in cash from my envelopes.
I am not tempted to spend money because I don't use my cards, and I really think about what I want to use my cash on. When you use your card you don't realise that $10 here and $15 there all adds up and before you know it you have spent $100 on unplanned items that you could probably live without.
I also only pay cash for my groceries and will only spend my budget limit and am very good at sticking to this and anything over goes back on the shelf, and I fill my car up on $50 petrol per fortnight and that's it.
Now when I have money left over at the end of the week I put it aside in another envelope and this then gets used when something unplanned comes up and we need it, or we spend it on the family as a treat, put it in a Christmas fund envelope or in an envelope for something we are saving for.
It is so nice to see the money start to build up in the account because we aren't making any other withdrawals apart from the one-off withdrawal for our envelopes each pay day.
Contributed by Amanda Woodwood