Introduction to Cash Budgeting

Aloha!  I'm no expert but we've been doing cash budgeting for about three months now and it's been great for our budget.  The basic premise is that you set aside cash each month for your spending and don't use credit cards.  I've always used Quicken to track our spending and budget, but it wasn't enough.  Whenever you're using credit cards it's just too easy to spend more than you planned.  If you're using cash when you're out, you're out and that's it.  Although it is definitely harder to track spending when using cash it is still possible and I think it's worth it.  

So far here are the different categories and envelopes that we have come up with:

  1. April spending money*
  2. Chris spending money*     
  3. Babysitter
  4. Dining*   
  5. Groceries                      
  6. Entertainment* (movies, bowling, etc.)
  7. Clothing
  8. Household (Wal-Mart, HomeDepot, etc.)
  9. Gifts*
  10. Work functions*

The ones with the * mean they roll-over each month.  What we still pay on the credit card/checks/auto pay are:

  1. Utilities (cable, electricity, cell phones, water)
  2. Insurance
  3. Gas (Automobile)
  4. Business Expenses
  5. Mortgage
  6. Savings/Investments

So grab some envelopes and fill them up!  But here's the catch: If you don't have your envelope on you, then you can't make the purchase.  This cuts back on the spur of the moment spending.   Here's another tip I've learned, TIP: When you're checking out at the register choose three to five things to put back. This can save you up to $40 each transaction.  But be prepared for getting dirty looks from the salesperson!   But if it's the best thing for my family then I'll do it and I don't care what other people think!  Good luck!