If you pay your full balance each month, there could be benefits to paying with credit cards, such as earning points you could turn into cash back or money toward, say, travel expenses. You could lose out on credit card rewards One idea: If you like the cash stuffing concept, you could make a “savings” envelope by writing out the amount, but instead of pulling out cash, move the equivalent amount into an interest-bearing account each month. If you stash your cash in envelopes, you won’t earn interest you could potentially accrue through savings or money market accounts. You could lose it or have it stolen, possibly with no recourse to get it back. What to do with your leftover utilities envelope’s cash? Put those dollars into savings.Īfter making your budget, this system requires you to physically go to a bank to take out cash and manually stuff envelopes.Ĭarrying a lot of cash, or even storing it in your home, comes with risks. If you didn’t spend all the money in your utilities envelope and those bills are generally the same month to month, but you were wishing for one more food delivery instead of 100% pantry dinners that last week of the month, you could lower your utilities budget and up your food budget. When the next month comes, rinse and repeat, tweaking categories’ allotments as needed. The idea is to not borrow cash from another envelope or hit the ATM again until the next month comes around. Because once the envelope is empty, that’s it for that category. If there’s only a little money remaining in your food envelope but a lot of the month left, that’s your cue to take it easy on the takeout. There are wallets designed to help with this if you prefer your cash envelope system to be more portable.īecause you’re keeping all of your spending money in envelopes, it’s easy to see how you’re doing over the course of the month. This only works if you bring that cash with you when you’re out and about and spending. That visually reminds you how much you’ve already spent and what you have left for each category. Take cash out of your envelopes to make paymentsĪs you make payments throughout the month, pull cash from the corresponding envelopes.Remember: You’re not putting equal dollar amounts in each envelope but rather the amount you’ve designated for each category. You could go high level, such as “food,” “fun,” “transportation,” “repairs,” and “savings.” Or you could get more detailed with separate envelopes for “groceries” and “restaurants,” instead of just “food.”Īt the beginning of the month, take out the total amount of cash you’ve budgeted for all envelopes and start stuffing. First step: Label envelopes with your spending categories. Once you’ve got your monthly budget, you could move onto prepping your envelopes (or any other container). (Need a refresher on setting a budget? Check out these tips to learn how to budget.) How to do cash stuffing or cash envelope budgetingīefore you stuff any envelopes, you’ve got to budget for all the spending categories in your life: your daily needs and wants, debts you owe, and money you want to save for later.
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