Funny thing about cash. 

The real kind. The green kind. You either love it or you hate it. The biggest thing about cash is this: You can’t spend more than you have. Have you noticed that too?

Let’s say those shoes are $90. And you only have $85 in cash. Can you buy them? Unless you can work a deal with the merchant the answer is (not rocket science here) nope. A big fat no. Well dang! So, you decide to put them on your credit card because you just LOVE those shoes don’t you?!

But, what if you were on a cash budget? Or using the cash envelope system?

Got questions? Like: What is a cash ‘budget’? How does it work? Can I do it? How do you begin? How do I say no? As a budget counselor I heard all of the above and many many more.

Before we can begin, let’s establish what a budget is.

What is a budget?

A budget is an opportunity for you to boss your money around. You can be the BIG boss. The BIG cheese.

If you don’t have a budget your money tells you what to do with each paycheck. Bill due? Gotta pay it. And what is leftover is yours to decide…only usually the leftover is pretty slim. Kinda like leftovers at dinner…not much.

Wouldn’t you rather be the boss? Have abundant extras? Save for a vacation or get out of debt?

What is the Cash Envelope System?

Before I begin, and not to discourage you at all, I want you to know that the Cash Envelope System is not for the faint of heart. It is only for you if you are serious about:

• Wanting to be in control
• Wanting to save for vacations
• Saving for your future
• Getting out of debt

It is for you if you are just sick and tired of living paycheck to paycheck. It is for you if you want to be the BOSS.

Here are your beginning steps:

     1. Determine your funding dates. Once a week, every other week, once a month. Typically it’s on your pay day

     2. Establish your fixed categories (things that are the same each month). Rent/mortgage, loan payments, utilities, child care, etc. Assign a $ amount to each one

     3. Add up those fixed categories. You now have: ‘Fixed Expenses Total’

     4. Subtract that ‘Fixed Expenses Total’ from your after tax income

     5. What you have left is your ‘Leftover Money’

     6. Establish your variable categories. Spending categories…not savings categories. Food, car gas, manicure, eating out, etc. Assign a $ amount to each one

     7. Add up those variable categories. You now have: ‘Variable Expenses Total’

In relationship to your ‘Leftover Money’, is your ‘Variable Expenses Total’:

• Less than your leftover money? Golden! Time to start putting money into those Sinking Funds categories
• Equal? Pretty good but, you have NO savings do you?
• More than your leftover? Not gonna work is it?  Remember, you can’t spend more than you have.

What do you do if your variable expenses are more than leftover money?

Well, you need to make adjustments. Delete categories. Cut back on food. Carpool. Do your own nails. Cut your husbands hair. Shop sales (Or, better yet, don’t shop at all). Don’t buy any more magazines. Bring coffee from home. There are so many ways to cut back. You might want to read ‘40 Ways to Save Money..NOW.'

You need to get those numbers, and for this tutorial, EVEN. (Once you are comfortable with even you can start putting money into your Sinking Funds categories.