5 REASONS WHY THE CASH ENVELOPE METHOD IS AWESOME

3Shares

This post contains affiliate links, which means we may receive a commission if you click a link and purchase something that we have recommended at no extra cost to you. Recommended products and services are based on my positive experience with them. Please check out our full affiliate disclosure

This post is all about the 5 reasons why the cash envelope method is awesome.

It has been a hot minute since I last talked about cash envelopes. Due to current events, a lot of stores have only been accepting credit/debit. I am hoping that things will get back to normal soon. On the other hand, some stores have continued to accept cash throughout this time. Either way, I know for a fact that I spend less money when using my cash envelopes.

If you are curious about how the cash envelope system works, it would be a good idea to read one of my posts on using cash as a method of payment. In fact, I have an entire post dedicated to the cash envelope system/method here. Make sure you go through that post to get the full picture on how to start using the cash envelope method. It will really explain the overall system.

PLUS, if you sign up to my newsletter with your email and want a set of DIGITAL cash envelopes, I will be sending you a set.

Still not sure why you should make the switch to only using and paying with cash? Here are 5 reasons why the cash envelope method works.

What Is The Cash Envelope Method?

I have dedicted an entire, detailed post on what the method is and how you can too get started with the system. But in a nutshell, the cash envelope method is based on ONLY using cash for all of your expenses. You keep the cash you pull out each month from your checking and allocate it towards spending categories such as food, gas, beauty, etc. The categories are endless and you will know what categories to start with once you have created your budget. I have another great post you should read if you are curious to see how to get started and create your very own budget.

5 Reasons Why The Cash Envelope System Is Awesome

1. You Are Keeping Better Track Of Your Expenses

The cash envelope method requires you to have cash distibuted in envelopes which are for your different spending categories.
When you have cash in your wallet, you know exactly the amount you have available. Unlike when using credit cards, where it’s an endless imaginary number you have at your disposal, with cash you know what you have, and you know how much you can spend. Paying with cash helps you keep track of your expenses better than when you use your debit/credit card. I also collect my bills in said envelopes and usually keep a tally of in/out $ from the envelope. You can either add an index card where you keep track or collect the bills in each envelope and later – at home – fill in your expense tracker. Paying with cash definitely helps you keep track of your expenses!

2. You Only Have So Much Money Available To Spend

The great thing with the cash envelope method and envelopes in your wallet is that you can only spend the money you have physically available. This money has been budgeted for (budget categories!) properly in advance. Unlike with credit cards where you can easily go overboard, having only a dedicated amount of cash available to spend in each of the categories allows you to keep spending within in your means. Sometimes you can “borrow” from another cash envelope category – but – I would usually advocate against it because you can get mixed up AND because you have set yourself a budget (one that’s as realistic as possible, hopefully), so you shouldn’t really start “borrowing” from other envelopes.

3. You Are Your Own Accountability Partner

When you pay with cash from your envelopes only, you are your own accountability partner. Your wallet and the cash inside of it, is what keeps you accountable! You may only spend what’s available, and you need to make

sure you don’t buy more than you can actually afford. You cannot “cheat” with cash, as opposed to using a credit card, and quite frankly, you are making a deal with yourself to be as responsible as possible. This is a feeling you really don’t have with credit cards. There is no accountability and often times you spend all throughout the month only to have the shocking awakening at the end of the month when your statement shows up.

4. Spending Cash Hurts

Yikes, paying for items with cash from your envelopes really does hurt! You see the physical money disappearing – in exchange – for goods but still, the feeling is quite painful. When you pay for stuff with cash, the feeling inside when handing over actual cash is much different than when paying with you credit card. Handing over cash to pay for items hurts. There has been actually a study done where people who paid with cash versus credit had different emotional feelings. It’s a lot harder handing over the physical cash and when it hurts, you are not tempted to spend more money. The link between using cash – which hurts – and keeping your money in your wallet is there. Try it out yourself!

5. It’s Actually Fun Handling Cash

Even though cash is probably pretty dirty and has been through many hands, I still find it fun to have cash in my wallet and to handle cash. When I was a kid I used to pretend-play bank. I had some money from my savings which I would use to pretend-play bank with. It was awesome!

Having cash in your hand or in your wallet is just a feeling that is so different from just having your plastic credit cards available. Having cash in my envelopes and pulling cash from my checking account each month makes me proud of the money and hesitant to go and spend it all. It’s fun and awesome to keep holding on and saving it – or seeing how long a hundred dollar bill can last you and survives in your wallet before you spend it. Next time you have cash available or when you start using the cash envelope method, see if you have that feeling too? I’d be curious to hear how you feel as opposed to just always paying with your plastic card which is a completely different feeling if you ask me.

Hover on Image & Pin For Later Please!

Final Note:

If you are still unsure about using the cash envelope method, make sure you read my post on how to start using the cash envelope system. It was a bit strange in the beginning but you get the hang of it ina short matter of time. You will also notice the benefits of using cash. From keeping better track of your expenses to being hesitant to let go of physical money, you will see how much more in control you are of your finances. Cash remains King in my household for sure!

This post was about the 5 reasons why the cash envelope method is awesome.