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As I shared in early June, we did the cash envelope system again. It has been several years since we tried so I was more curious than anything to see how things went. I recorded a video to share but the camcorder died so you will not get to see my face. I even had my hair fixed! :)

Surprisingly, the cash system worked well. But only because I modified it to work for us (as opposed to how Dave generally suggests it in Total Money Makeover).

The first modification was that we did NOT get enough cash to fill every envelope. I have a spreadsheet with all of our expenses listed and decided upon the categories to use cash only for the month. Well, there was an *ahem* miscommunication between me and my husband so we didn’t have about $200.

This was good and bad. I didn’t really *have* to fill the hair envelope this month. After doing our month-end review, I saw that we underspent (by a lot) in our grocery category. So I transferred that money to the hair envelope. Which, my husband then removed (which I will explain in a second…). By the way, this category covers expenses for hair products, haircuts for hubs and the boys, as well as my hair styling (I have a lot of grey!). Yes, I am a hair products snob but at least I shop at Ulta or so I’m spending even less.  Someone asked me this on Instagram so I wanted to explain that one a bit. :)

The second modification was related to Paul’s monthly allowance and gas. We have a second checking account and agreed to add money into that account for him to make debit purchases, or pull out cash. He also used that to purchase gas for the month.

Since that bank is also where I have my business account, I would see his balance frequently. At one point I even said, “Boy, you are running low and you’re not getting anymore money.” Little did I know he actually took out the cash so I guess he was using cash primarily throughout the month. You got me, hon!

The third modification was transferring cash amongst the envelopes. Since we didn’t get enough cash out, I noticed there was enough left in our grocery envelope to “transfer” to our hair products envelope. Well, one time that I had the grocery envelope in my wallet still when Paul went to purchase a few things. He made it known that the envelope should be returned (as evidenced above). This is why he removed the money from the hair envelope (which was transferred from the grocery envelope).

An eye opener during this was about our dining out behaviors. We eat out way more than I thought. Our entertainment budget was dry at the end of the month. Our grocery budget was 75% funded still (even with the above transfer). So, I ended up hitting Costco for  a few things on Friday and literally went into this month’s budget. I could have waited but when you have the time and only one kid to shop with, you do what you gotta do. Am I right?

FYI, I’m planning more meals for July so we spend less on dining out. Plus, I am really focusing on our eating habits and fueling our bodies with the right foods not the easiest things to prepare (but we do still love Costco’s frozen pizzas and 100% natural chicken nuggets for lunch at least).

I see a few cautions for people who are trying this system, or are new to a cash budgeting system. If you don’t have a large amount of cash at your disposal, I think this would be challenging to do. Or, I suppose you could opt to only do cash in a select few categories. Or maybe take out more with each pay day. Whatever it is, it can be done, but I do see some challenges that may present themselves. Planning ahead to what those are will definitely help you be more successful.

Even with our cash, I took out enough to cover 8 areas of spending. Some was spent during the month, while others were allotted to that category and will be spent at a later time (like clothing and hair/hair products). We get paid twice a month too so taking it all out at once made the bank account tight for a few weeks. However, the plus to this is that we didn’t have to do any other withdraws and had very few debits throughout the month (pretty much just my gas purchases).

We plan to do cash only again this month. At our “meeting” Paul even suggested we need to get lean and find ways to cut more. In all honesty, I’m happy about that. I was very liberal with our amounts and realize that the summer months have some added expenses for us.

I want to challenge our spending and saving

. Having him “on board” to help with this will make me more accountable. Since I manage the finances for the most part, I have gotten more laid back about things. Doing the cash system for another month (or as long as it makes sense for us) will be a good way to be more mindful of what we’re spending.

Finally, we still used our credit card last month. However, it was limited to purchases made online (since I’m still weirded out about using my debit card online AND in restaurants where it is out of my sight). If we wanted to use plastic, we used the debit card. While we do pay off our credit card each month, I gotta say that having a smaller balance to pay off is quite refreshing!

This month we are withdrawing the same amount of cash (minus the amount I overspent at Costco for groceries). Join along this month and I welcome you to share your experiences too! Leave a comment here and let me know if you will share your experiences, even if you’re a vet at the cash budgeting system (you have lots of wisdom to share!). I’m curious if using cash only will help you save more everyday.

About Andrea Deckard

Andrea Deckard is a personal finance expert and speaker. She lives by the following motto, "save on what you need so you can spend on what you want." She started Savings Lifestyle in 2008, and long-time readers remember the site as Mommy Snacks. Andrea is a go-to resource on frugal living for local news outlets such as WDTN, WGRR, and as well as national outlets like Good Morning America. She has also been featured in multiple national publications.


  1. Esther on July 5, 2012 at 8:15 pm

    I started using the cash system for grocery shopping only about 3 months ago. I can’t believe what a difference it has made! While we may not have tons of money left over in our envelope at the end of each month, it sure has kept the spending in check. It really forces me to evaluate our purchases and reduces the impulse spending. My next goal is to allocate cash for the kid’s clothing and Target. I know that will be more difficult for me, but since I feel comfortable and confident with using cash for groceries, I know that the adjustment won’t be too terrible. And, ultimately, our checking account will benefit! :)

  2. Kathryn on July 5, 2012 at 9:19 pm

    You know I’m a Dave Ramsey fan! So I really like reading this blog entry. When we first started we did the whole Cash Only but now because we use Dave’s budgeting tool on My Total Money Makeover (which is like your spreadsheet is for you), we just go by the amounts left in each category…treating it like an envelope. IF I use the credit card (Disney one from Chase) then I actually send the payment the same day I use it. That way I don’t feel like I really used credit. I know Dave would be so disappointed, but the thought of getting FREE Disney Park Tickets is really appealing for this family of 8! :) ….. and as far as your bank account being tight, that really doesn’t matter cause you have the cash for everything. But its another reason why I like to leave it in the bank. I know Dave says it hurts more to spend cash, but it hurts just as much for me to see less in the bank and in the budgets and we usually don’t go over whats budgeted ….. oh and on the credit card thing, because I make payments as I go, we’ve actually run more through the credit card than our limit is. That won’t happen every time, just when we were paying the rest of the cruise off. :) ….. I get excited talking “budget” so this might come across scrambled. lol!

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