The Cash Envelope Dilemma - Live Like a Mensch
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The Cash Envelope Dilemma


Photo courtesy of Psychonaught, whose dad apparently never taught him to put the smallest bill on the outside.

For several years now, J and I have been paying for cash with things, using the Dave Ramsey envelope method.  The popularity of this method--where you get cash at every pay day and put it into specific envelopes for each purpose--proves that everything old is new again.  According to my dad (who did teach me to keep my singles on the outside of my money clip), my great-grandmother could never get the hang of banks and kept returning to her envelope system after each failed banking attempt resulted in overdrafts and other issues.  I can't imagine what she would have done with online banking.

In any case, we quite like this system, as it makes it very easy to pay for anything we need, from dog food to day care to dishwashing detergent (although we also buy things that start with other letters, too).  When we first started the envelope system, we used actual letter sized white envelopes with the purpose written across the front.  It was convenient because we could bring the entire envelope with us when necessary, like when we went grocery shopping or ate at a restaurant.  But regular letter sized envelopes are made for speed and not endurance, and so we eventually decided to replace them with an expanding coupon holder.

This is both good and bad.  Back when we were using regular envelopes, there would invariably be an envelope still hanging out in someone's pocket or wallet or glove compartment when it came time to dole out the next portion of cash.  So I'd either create a new envelope for that purpose (which would mean we'd have envelope twins and triplets hanging around, none of them with much cash in them), or I'd waste 20 minutes tracking the envelope down.  So it's nice that our new accordion files cannot get lost that way.  However, using the cash requires estimating how much you'll need and taking it from the particular envelope to go with you.  This becomes even more difficult if you have several errands.  Suppose you need to pick up a tool at the closest Lowe's, go grocery shopping, and then pick LO up at day care.  You'll end up with a pocketful of uncategorized cash that will NEVER become easy-to-return-to-its-envelope change, and so you spend a frustrating several moments looking for your receipts and a calculator, figuring out how much you owe each envelope, and then trying to find change from the other envelopes to place the proper amount back where it belongs.  Feh!

The uncategorized cash problem also leads to the found money conundrum.  Going through pants pockets prior to doing the laundry (which I learned to do after a disastrous lip gloss incident), I will often find random money.  Sometimes it's wrapped around a receipt, which lets me know what the money belongs to.  But more often than not, the money is silent as to its origins, taunting me with the possibilities for its use.

That's usually when I put it in LO's college fund:

Once this bad boy is full, LO will be able to go to Harvard!  (To use the restroom.)



Kassy said:

We have used the envelope system for years. However, I can understand how it may be 'dangerous' in some areas to have so much cash on you (not so much so in a rural community).

I just put whichever envelopes I need for my errands in my purse and manage to keep things separate that way. BTW...we do not spend change at all so that ends up in the bottom of my purse (not in the envelope) and goes into our svgs acct. for grandsons.  It's really quite simple. And yes, the paper envelopes are fragile to some extent but we only handle them about once a week.

The best thing about paying with cash is how fast you can go thru the checkout!

February 17, 2012 5:30 PM

livingsimple said:

I also have small accordion file with envelopes for each catagory.  I take whatever one I need with me when I shop or eat out.  I do not put coins in, I save those seperately.  I make my own envelopes w a small envelope template and use a large manilla envelopes for the paper. It makes several and is stronger paper and lasts longer.

I tried using scrapbook paper too, but the lightweight ones don't last as long.

February 18, 2012 11:14 AM

LVSquared said:

Have you all thought about dollar store zipper pouches?  The ones kids use for pencils & crayons?  They are fab, and pretty sturdy.  Plus in a binder where I can easily get to them and they don't look like a money holder - just a binder hanging out.

February 19, 2012 11:56 PM

Emily Guy Birken said:

LVSquared, that's a great idea.  I'll have to look into that one, since we're not entirely satisfied with our accordion file system.

February 20, 2012 10:51 AM

Live Like a Mensch said:

Photo courtesy of Frank Hebbert , who is no relation to the guy who wrote Dune . As I have mentioned

May 23, 2012 1:44 PM

Live Like a Mensch said:

Photo courtesy of Jim , who apparently needs no other name. I've mentioned before that J and I have

June 11, 2012 8:51 PM

Live Like a Mensch said:

Photo courtesy of marya from San Luis Obispo As I've mentioned before , J and I use the cash envelope

July 27, 2012 10:26 AM

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