To ask if anyone does the ‘Cash envelope system’ to budget?

[StickThatInYourPipe]

Hi All

My partner and I finally went through our finances at the weekend and quite frankly they are shocking. We are always needing to use CC by end of month and now I can see why this is! We live completely beyond our means!

Has anyone tried the cash envelope system to budget? I have been seeing online some videos etc but was just wondering how people actually got on with them.

Thanks!

Yes, I'm with you now OP.
I took out £50 this morning from cash point in town. I bought the fresh meat and veg I needed, had to pay by cash as market.
What's left will go into envelope for dd pocket money, and envelope for holiday spend.
When there's enough before holiday I'll change to euro's.
I think it's great for the ad hoc spends, but prefer like a pp and move from one account to another, online.

You don't need actual envelopes. I use Good Budget app and virtual envelopes. You allocate X amount to each category then track what you spend.

Yes I agree it should be taught in schools. Budgeting is a huge part of life.

We have used the envelope systems previously - mostly because it stopped us causing our cards for small amounts which quickly add up.

Take cash out at start of the week and separate into food shopping, going out, kids activities, etc etc. There was a programme we used to watch that did it with jams jars. I think it was really effective as you were using cash as much as possible so you really saw where the money went. Along with a spreadsheet to map our monthly spends and Direct debits it was really useful.

Yes I do the cash envelope system

I also have a spreadsheet which is broken down into sections too so that we can also budget for the year

my dh pays all the direct debits, then transfers me a set amount which I use to get through the month

if it helps these are my "envelopes"

school dinner money
haircuts
petrol
kids pocket money
groceries
window cleaner
going out money (eg. cinema, restaurant etc.)

above is the monthly outgoings

then the three below I put money aside each month to use as and when needed, although we work out how much we needed to put aside

clothes
presents (birthday and christmas)
sundries which is usually yearly stuff like car insurance, house insurance, tv licence etc.

I also reconcile my purse and bank account/credit card at least 3 times a week, to ensure we're still on track

I've been running that system for getting on for 16 years now. It works for us.

I think it can make perfect sense. It is just a physical way of having multiple accounts and a very simple way of monitoring spends and sticking within budget.

I have labelled that sort of cash up as ‘blow money’

we call that slush fund

We've tried virtual envelopes - doesn't work for us. We end up spending odds and sods on cards which mounts up.

The problem with electronically doing this for me is that I will just move money and not think about it. I think it will help having physical cash that I can touch iyswim

I would like to not use my cards when possible. Also have finally deactivated Apple Pay from my phone, I think that will probably help the most! Haha

Following a PP's advice - I use the Monzo account as the app is really clear. The app shows instant transactions and categorises them into food, eating out etc.

I use it for my 'spending' money so I know that I have enough in my other current account for all the bills. Then I have a really simple view of my spending and where it's all going and when I have run out.

Bit safer than cash perhaps?

We do and its taught at my school i went too. We use cash to buy food etc as you can control it.

Oooh

Also have specific pots for change

So at the end of the week if i have any 20p or higher it goes into two little tins...one for £1 that the children need for school dress down day and such and one for really cant be arsed to cook but ive no money

My dad tells me i used to upset my mum when dh and i started this many years ago...we would say we had nothing left in the food account that month. And my mum would be like 'they are going to starve we have to do a food shop for them'

My dad would step in and remind her we had eleventy billion other accounts with money in

Thanks dad

I used to put cash in envelopes but now I use my online banking app and have a couple of 'spare' saving accounts to squirrel away money if I need to.

I keep a list of what is in each account and what that cash is for. I update those lists whenever money is spent.

As well as my own accounts my dh and I have a joint one for money we share. So cash for weekend lunches/coffees , our food shopping and kids haircuts/trips/clothing will sit in that account. We also update our list for that account whenever any is taken or spent.

The key is to keep track of everything you spend and as boring and tedious as it is make sure that you are aware of where your money is and what it is for. Check daily ideally.

Budgeting should definitely be taught at school - could easily be slotted into Maths and PSHE lessons. I don't use the envelope system but i do keep a spreadsheet showing all spends and income over the month - this makes it easy to isolate the essentials and then see what may or may not be left for other stuff.

I have in the past and it really worked for me.

I have a few bank accounts but it's impossible to have enough for everything. Easier to cash in envelope it. I need to do it again TBH.

My friend just called me to say she's done a 3 week course with something called Christians against poverty. I am quite surprised but it taught her basic budgeting which she definitely needs. She's buzzing about a 3 pot system they taught her which sounds similar

I love You Need a Budget.

Works very well for DH and me. The problem with envelopes is that you will inevitably get the amounts a bit wrong then feel like you've failed when you need to move some money around.

YNAB allows you to make adjustments easily.

Also how do you account for savings if you do envelopes? And buy on-line?

I just use YNAB. I love it.

I used to do this when I got paid in cash but still do it now albeit sectioning off bits of my bank account each month ie x amount for bills, x amount for car expenses, x amount towards presents for christmas/birthdays. Its the only way I can budget - however DH (now ex) couldn't get the hang of it at all - maybe explains why he had a massive overdraft and I didn't!

Good luck stick

@StickThatInYourPipe just because your parents failed to teach you basic life skills doesn't mean you couldn't have thought "oh, I wonder what all this budget stuff is people talk about... maybe I'll google it"

One of the skills school should and do teach is how to independently research something.

Yep, hoping that it will make a difference this year with Christmas.
We also take out money in advance for nursery fees for the term (as that’s how we pay them here). We also have one small envelope for savings for DD1 and a tiny amount for baby no2 when they arrive in June.

Putting away £15 a month is a pretty small amount in each but at least it will all count at the end of the year, I wouldn’t like a large amount of cash lying about our house so I find smaller amounts work better and I don’t ‘borrow’ from them.

I’ve found for groceries, I set an amount aside in our bank account but I keep all the receipts at the end of the month and tally it all up. These small changes have allowed me to get a little bit of savings behind us, enough that we now have an emergency fund (small but it will grow)

I use the YNAB app that is basically an eletronic evelope budgeting tool. I LOVE it.

I was badly in the financial shitter about 5 years ago and used the envelope system for a couple of months. It really focussed my mind and made me think about what I was spending. It's a good reality check and great in the short term but I don't think it's a long term solution. It's a very good place to start if you're anything like i used to be and get to the end of the month with no money and have no idea what you spent it on.

Hi stickthat theres a really nice bunch of us over in the credit crunch corner, the current thread has always got a 'frugaleer' title. We help and support each other budget (and spend wisely, it's absolutely not a no spend thread, we all have to eat).

Several of the regulars are envelopers (is that a term?). And most use budget apps.

It's taken me a year to reign in my spending, and am switching to real envelopes and cash for march, adding up card spends as I go isn't cutting it at all for me! I'm hoping it will keep my supermarket spending under control, and curb the endless topping up.

I am not great with money. The problem with the cash in envelope idea is that if I have the cash, then I will spend it. It is as though it burns a hole in my pocket. It is like free money, although that is clearly nonsense.

I also taught my dds about saving and money - I do have savings and only a small mortgage. One dd is not too bad but the other is a complete disaster, bailiffs etc. You cannot make someone into someone they are not.

Today I was sat with her youngest son and we were watching Wanted Down Under. He asked how on earth people got the money for the houses out there. I said, well you sells yours. He said "we have nothing to sell nana. This house is not ours and it never will be". Even at 10 he understands the family struggle.

Sorry to digress op. My best way of avoiding overspending is to stay out of the supermarket. Just stay out for as many days as you possibly can. Many posters on here recommend only buying necessities during the month ie no clothes, make up etc. Combine the two and you may make some headway.

Do it virtually using a spreadsheet and willpower. If you withdraw all your cash and its stolen, it will leave you in more trouble than you are now.

Round down all incoming money (so £107 coming in is £100)
Round up any bills (so a gas bill of £107 becomes £110)
Work out how much you have coming in every month.

Write down all your outgoing bills in order of importance; mortgage/rent
utilities
insurance
travel
food
household/laundry/cleaning

estimate an amount for;
clothing
replacement white goods and large items

Make a document that details all the suppliers, account numbers, contact phone numbers and other details.
Its usually easiest to cut back on non essentials first, then work on reducing your food and clothing budget.
Look at using economy 7 electricity to run the washing machine and dryer as its a third of the cost of the daytime rate.
Make sure you haven't insured anything twice.
Look at energy saving measures, insulate your loft and line your curtains.
Look around the house room by room for anything you don't like or need that you can flog on Ebay.

Keep going until you have at least 6 months income in savings.