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A few years ago, I began using a cash envelope system to pay down a high credit card balance. To do this, I placed a budgeted amount of cash into separate envelopes marked with expenses like groceries, restaurants and other daily costs. Then I paid cash for any items in those categories.
Handing over cash made me a more careful spender. I no longer blew through hundreds of dollars with a series of painless swipes and little thought. As a result, I paid off an $8,000 debt in 18 months.
I’m a big believer in the cash envelope system. However, I had to experiment with different methods before I found one that worked for me. I’ll tell you about that in a bit. But first, let’s look at how to use a cash envelope system and why it makes you a better money manager.
Choose your cash envelope system
The first thing you need to do is create a budget or refer to the budget already in place. Then figure out how much cash to place in each category’s envelope for each pay period.
Here’s an assortment of envelope systems to get you started…
