We don’t hide the fact that we use a cash budget. When it comes up in conversation, it usually elicits lots of questions such as; “how do you only live on cash? do you have a credit card? how does it work with two people spending money?” etc.
I would like to answer those questions and more. But, my real goal is for you to see that living on a cash budget can be done! It’s actually much easier (for me, anyway!) than trying to keep track of credit card spending while staying within a budget.
This is the process for setting up your monthly cash budget:
- Withdraw cash from your bank to fill your envelopes with your pre-planned spending amounts for each of your categories.
- Fill your envelopes.
- Spend using your cash envelopes until the money runs out or the month ends, hopefully the latter. 🙂
- If you purchase something online, simply take that amount of cash out of your envelope and deposit into your checking. Pay off your credit card immediately.
See? It really isn’t difficult to do!
Below are the categories where most of my spending happens throughout the month:
- Date Night
- Eating Out
- Family Fun
The envelopes below are a kind of “savings” envelope as they will build up for months before the spending happens. These are especially helpful for me when Christmas rolls around – instead of being tempted to spend everything in my savings, I have the cash we have saved throughout the year. It’s guilt-free limited spending.
These are my cash “savings” envelopes:
- Kid’s Sports
We keep our regular savings account (at the bank) for our 3-6 month emergency fund. We generally never touch it, except when depositing into it each month.
If you are just starting to budget, you many not know how much you spend each month on groceries or clothing, etc. It is a balance to budget enough to be realistic, but not more than you can actually afford.
If you would like to a free printable to build your cash budget, click here.
We have been using a credit card to earn free rewards for our summer vacation. We have paid for a little over two weeks hotel nights with points! To learn how to do it, click here.
Blessings on your journey to financial freedom!
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