Home » Our Cash Budget Envelope System: 3 Month Update!

Our Cash Budget Envelope System: 3 Month Update!

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

They say it takes 90 days to form a new habit.

Well, I’m proud to say that as of this May, Mark and I reached 90 days of using our new Cash Budget Envelope System.  And we are still goin’ strong, people!

Now, paying for our unfixed expenses with cash instead of plastic hasn’t been easy breezy.  We’ve had to maneuver some bumps in the road and learn some hard lessons, but overall, these first three months have been a truly positive experience for us.  We’re seeing the fruits of this new system in financial wellness.  And THAT is exciting.

So, I thought I’d dedicate today’s post to sharing about our first 90 days of turning a financial experiment into a habit we plan to keep.  I’ll be sharing the highlights, challenges, as well as some of the adjustments we made in our cash budget envelope system this February, March, and April.

But First, a Refresher!

Now, for those of you just tuning in, I have two posts from January that will give some helpful background information as well as some resources you might be able to use:

The short of it?

One of our goals for 2015 was to create and actually stick to a monthly budget.  And after hearing so many success stories on The Dave Ramsey Show of folk who saved incredible amounts of money by paying for their expenses in physical dollars and cents, we decided to give it a whirl.

So, we created a Budget Binder for tracking of our monthly goals as well as the nitty gritty financials.  And I used my Silhouette machine to create some pretty envelopes for divvying up our cash (because sometimes, the petty factor can go a long way in helping me get excited about something I’m dreading).

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

Now, let’s dive in to the month-by-month updates, shall we?

What We Learned in Month #1

Highlight:  It took a few weeks to get in the habit of remembering the right envelopes before leaving the house, but once we did, we noticed a positive impact on our spending almost immediately.  The physical exchange of dollar bills at the cash register instead of the swipe of a credit card increased our awareness of what exactly we were spending our money on.  Our spending quickly became so much more intentional.

Challenge:  Before the end of the month, we ran out of money in our envelopes for GROCERIES and LAUREN’S FUN MONEY.  (Womp womp.)  That made us re-think our allotment for those categories, but also forced us to look at what we were spending that money on.  For me, realizing how much of my FUN MONEY was going toward Starbucks frappuccinos and pastries inspired me to make some dramatic changes to my diet this spring.

Adjustment:  We decided to add a new category to our cash budget envelopes: GENEROSITY.  That way, when we want to buy coffee for a friend or help fund a mission trip, we don’t need to pull from our other envelopes.  Instead, we’re intentionally budgeting for it, which has already inspired us to seek out opportunities to be generous above and beyond our normal tithe–something that Mark and I decided is a priority for us.

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

What We Learned in Month #2

Highlight:  We not only stuck to our budget this month, but came in several hundred dollars under budget!  It was encouraging to see this system help us curb excessive spending and throw more money at our savings.

Challenge:  We also learned the importance of scheduling our monthly check-in meeting by the 28th of the month.  Life got busy toward the end of March, and we ended up having our meeting to review March’s envelopes and prep for April on April 6th, already one week into the new month, which of course threw off our calculations.  We decided there and then, that’s not something we want to get in the habit of doing.

Adjustment:  We decided to change our CLOTHING category from a zero-based monthly budget (use it or lose it) to one that would roll-over from month to month and hold a balance.  We just realized that some months go by where we buy no clothes whatsoever, while during others, we have a special occasions and need to make more purchases than normal.  So, a roll-over account for CLOTHING makes more sense for us right now.

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

What We Learned in Month #3

Highlight:  We had a special trip this month and created a cash envelope just for that trip.  We were both a little worried going into it that it might be a kill-joy to have a spending limit, but if anything, it increased our joy.  How?  Well, we really felt a sense of freedom, knowing exactly how much we had saved up for this occasion, and we enjoyed the process of intentionally choosing how to spend it.  And when we came in under budget, we decided to put that extra money toward an air-boat ride back in Orlando when my friend Gina was in town!  I think we enjoyed it all the more knowing it was money we had already set aside for something special.

Challenge:  When we make purchases online, we still move the money over from its envelope to our BANK envelope, just to be able to account for it as well as experience a physical transaction take place.  However, we fell out of that habit during the month of April.  Oopsie!  That’s something we’re committed to remedying going forward.

Adjustment:  If I find a gift that is perfect for someone, I like to buy it there and then, even if their birthday or special occasion isn’t for another few months.  So, just like we decided to change our CLOTHING budget from a zero-based one to roll-over, we decided to do the same with GIFTS.  Those are our only two roll-over categories right now.

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

Our Biggest Takeaways

Now, if I could pull out a few golden nuggets of wisdom that we’ve gleaned through the first 3 months of our cash budget journey, here’s what I’d highlight, dear reader:

1.  Make it your own.

I really can’t stress this enough.

When it comes to budgeting, you need to figure out what works best for you and your family.  Some families decide to cut up the credit cards and pay for everything with cash.  (And I mean everything.)  Others don’t use cash at all, but carefully record every transaction on paper or using an online budgeting tool like Every Dollar or Mint.com.

For us, we developed a system where we pay for most of our fixed expenses with credit cards and most of our unfixed expenses with cash.  But we’re continually adapting the system as we hone in on what works best for us.

2.  Keep clear lines of communication.

I think the key to making this system our own has been clear communication between Mark and me, not only at our monthly check-in meetings, but throughout the month.  We’ll discuss struggles we’re having with certain categories or ideas we have for improvement.  We’ll run big purchases by each other or even share small triumphs, such as, “I didn’t stop at Starbucks today because I wanted to save that FUN MONEY for the Fringe Festival!”

Even if you don’t have a partner that you’re budgeting with, I’d recommend writing down some of that communication.  Seeing your progress in writing will help keep you accountable to yourself, as well as give you something to look back on with pride!

3.  Give yourself grace when you mess up.

It’s not a matter of “if” you will mess up, but “when.”  We messed up a lot these past three months, be it forgetting our envelopes at home again or waaaaay underestimating our grocery budget and needing to call an emergency meeting mid-month to allocate more funds.

But rather than throw in the towel at the first signs of failure, we determined to dust ourselves off and get back in the races.  Because the benefits we’ve seen from the cash budget envelope system have far outweighed our mistakes.

Not only have we saved more money, but we’ve learned how to be intentional with our money–investing in that matter most to us, not just spending it willy-nilly.  And that has been an empowering experience for both Mark and me.

Our Cash Budget Envelope System: 3 Month Update!  |  They say it takes 90 days to form a new habit...well, here's the full run-down of our first 90 days of using our new cash budget envelope system, from the highlights to the challenges and adjustments we've made.  We hope our story is an encouragement to you in your own journey toward financial peace.  via thinkingcloset.com

A Word of Encouragement

If budgeting or trying the cash envelope system is something you’re considering, I hope our story inspires you to give it a go.  Even though we still have a lot to learn, these past 3 months have felt like financial leaping after years of shuffling through the mud.

So, don’t wait until it’s convenient.  And don’t wait until you can do it perfectly.  Truth be told, it’s never going to be convenient nor will you ever do it perfectly.

But if you’re willing to get back up again after you stumble and fall, well then, prepare to LEAP!

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31 Comments

  1. I keep the money for the bills I pay in the bank and use bill pay to pay those. The saving money goes into savings and I have an excel worksheet on that to keep track. Then I have envelopes for cash purchases. I don’t shop much and even less now that I am keeping track. I now have cash leftover and it rolls over each month. I don’t have much money and do this on my own, my hubby didn’t want to be a part of this yet, so I work on this weekly and keep up my budget sheets to keep track of all my spending and the balances. It is amazing to be free from worrying about where the money is going and know exactly what I have.

  2. Just checking, how did the system work out for you. Are you still using this system? I was reviewing sites because I planned to get back to it. I used to do it this way when I worked. I liked your generosity envelope. In my head I would like to do a $10 spend/week for food pantry or socks for a local man who passes out to the homeless Thank you.

    1. Hey Jean! We used the system for a solid year, and then adapted our approach from there…using the envelopes for certain categories for which we really benefited paying in cash (i.e. entertainment, fun money, generosity, travel). Truth be told, we fell off the envelope wagon when our daughter was born in 2016, but we recently were chatting about wanting to get back on! We grew from the experience SO much…especially our monthly check-ins. I encourage everyone to give it a go and develop a system that works for them. Best of luck to you!

  3. Hi Lauren
    Great budget fix. I’ve done the envelope thing before for vacations…and yes it worked just fine.
    This is very inspiring keep up the good work.
    I will consider some of your tips now that I’m on a monthly income. Blessings.

  4. Very informative post! My husband and I love Dave Ramsey s principles. We’ve been wanting to start the envelope system. One of struggle is for example, I forgot to buy some ingredients for my cooking (although I list everything when I groceries), he will go directly to the store from work (to save time and gas) without the cash money so he will use his card.

    How do you share the envelope system with your husband? Do you half the budget and give him a set of envelope with the same tag. Hope you can give me an advice based on your experience.

    1. Sorry for the belated reply. But to answer your question, we kept the envelopes in their little “home” by the door, so that when one of us was going out, we’d grab the ones we’d use. And I usually held onto my own Fun Money envelope at all times as well as groceries since that’s my responsibility. I really like finding a way to keep the money in one pool if possible…so you two share the weight of sticking to the budget you both set. There are obviously some logistical issues to work out if you’re both out running errands and making purchases at the same time. Hope you can find what works best for you!

  5. Came to your site by googling “template for #7 cash envelopes”, as my husband and I are about to embark on using a cash envelope budgeting system (which we should have done years ago!) I agree, the “pretty factor” helps with motivation for me. I have some questions and a comment: 1. I was thinking the envelopes that open at the short end would be better because you can keep the coins you get in change in the envelopes easier. (If you google #7 cash envleopes you’ll see what I mean, but they also are similar to what my bank gives me cash in when I make a cash withdrawl with a teller) I can use your templates and just glue the other edges leaving one end open. Your thoughts? 2. I can see me easily keeping envelopes in my purse, but asking my husband to carry pretty envelopes…or anything that doesn’t just fit in his regular wallet…not sure what’s going to actually happen when the rubber meets the road on this. I can’t see the wallet Dave Ramsey sells working really well for him either because of the length–won’t fit in his back pocket the way his wallet does. Do men just put envelopes into their regular folding wallets? He’s going to need to have his envelopes with him every day. Your thoughts/suggestions, please.

    Now my comment. We have faced years of both financial and organizational struggles, and I have become very determined to deal with both these issues this years. I asked the Lord for a word for 2016, and what He gave me was “Leaps and bounds”. So when I read your last sentence, “prepare to LEAP!” it was one more sweet confirmation from my Heavenly Father that I am on the right track. So thank you for being led by the Holy Spirit in your writing, whether you realize it or not.

    1. Aw, I’m so glad you were blessed by this post! And my apologies for the mega-delay in my reply, Laura. I hope you and your husband found what worked best for you in terms of the logistics of envelopes and wallets…from all your creative ideas, I have no doubt you had no shortage of possibilities for troubleshooting. I hope 2016 was a year of leaping with the Lord’s guidance! And that your 2018 proves to be a sweet year for you both.

  6. You have no idea how excited I was when I came across this blog post. I am currently trying to get my finances under control so that I can stop living paycheck to paycheck and get out of debt. I decided using cash would be a good way to limit myself and reign in my spending. I spent all day yesterday looking for envelopes/an organizational system that I actually liked with no luck at all… until I saw your post that is! I adore your envelopes and the size is perfect!. I personally have a Cricut so I had to get a little creative when it came to getting your template to work for me but I did and now I have beautiful cash envelopes that fit perfectly in my wallet! The pretty factor gets me enthusiastic about this whole process. THANK YOU!!!

    1. You are so welcome, Laney! I’m so glad you found a way to make your own envelopes with your Cricut! Hooray for prettifying all the things. 😉

  7. Oh I love this idea of having a separate category for Generosity! Also, I love those fun envelopes you have for budgeting! It makes me want to try it myself 😀

    1. Thanks, Kim! So happy to hear you found some inspiration in this post! Yes, once Mark made a proposal of generosity having its own category, I thought it was so smart and really fit what we’ve decided to prioritize.

  8. My husband and I also follow Dave Ramsey’s teachings and I couldn’t be happier with them. Yes it is a sacrifice and can be so hard at times, but it is defintiely well worth it. We actually started 4 years ago right after we got married.I’m so thankful we did and didn’t wait until later in life.

    Being a blogger as well, these principles have been a fun challenge to me to still be able to create some amazing content and posts while still doing it on a budget and not breaking the bank.

    I love the envelopes you use as well. So cute!

    1. Well said, Bethany! That’s so neat to hear you two have been following Dave Ramsey’s teachings since you and Mark first got married. We wish we had done the same…and actually gifted the Total Money Makeover gift set to my sister and her soon to be husband for that very reason!

      And you bring up a good point about the extra challenge of growing a blog and a business while on a tight budget. It does make ALL areas of life so much more intentional, and I think it in turn brings out our creativity! At least, that’s the glass half full view I try to take.

      Thanks for yet another encouraging comment! Have a great week, Bethany.

  9. This was a great summary of your first three months. I like how you discussed it by highlights, challenges, and adjustments.

    Your generosity envelope is brilliant as well as carrying over clothing and gifts as they are not used every month. So excited for you both.

    When your dad and I started documenting how we were spending every penny, early in our marriage, it made a huge difference and helped us to be more intentional and less impulse-driven.

    I will discuss with your dad how we might adapt this plan for our lives. I love how even with failures and mistakes, you dusted yourselves off, reevaluated, and got back on track!

    1. Yes, it wasn’t a journey without ups and downs, that’s for sure…but we’re still climbing up the mountain! Harrah!

      And that’s so neat to be reminded that you and Dad did something quite similar in your early marriage days. You both have been such great financial role models for us…thank you for leading us so well by your example!

      1. Well, you and Mark really walk the walk. I was impressed how you even brought those envelopes with you as you traveled up north for the wedding in June and used them so wisely. So neat how the circle of role modeling has come around back to us from you. Bravo!

  10. Yay for conquering the first three months! 🙂 I love how you set up an envelope for generosity and how you’ve adapted this method for your own needs. It is easy to want to set up a budget exactly ‘like the book’ (or maybe that is just me?) but then you end up frustrated because we all have such different lives! And oh my goodness, I hear you about the coffees and treats–that was my greatest shock too. I mean, I should have known since I was on a first-name basis with Elsa, the lady who ran the coffee cart at work, but still! 🙂 Hope you have a great day, Lauren! I always love reading your posts. 🙂 🙂

  11. I love the monthly check ins. My husband and I live on cash (or try to) but found having envelopes doesn’t work for us. Instead, we give ourselves a weekly amount that has to buy anything and everything that week. I do like the idea of rolling over some leftover money for gifts and may have to start doing that too.

  12. “So, don’t wait until it’s convenient. And don’t wait until you can do it perfectly. Truth be told, it’s never going to be convenient nor will you ever do it perfectly.”

    You have so hit the nail on the head with that summary. I’m only “making” my master thesis project money, which isn’t a full salary at all, but even that can be budgeted and allocated for specific things, And of course, I completely blew it in April (London is so expensive), but that just meant cutting back in May. I love that budgeting and really doing my best to stick to it allows me to reach these little milestones, be it in savings or purchases, and having the security to know that I can pay for things each month. But it’s really reassuring to read that I’m not the only one who slips up sometimes 🙂

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