If going retro involves reviving an outdated trend, style, or fashion and making it a functional norm…then it’s time to retroact the envelop system. Old school envelops never go out of cash-management style. To quote Big Momma and ‘nem, cash is king!
We are definitely a people persuaded by plastic potential. Cards are convenient. I agree. There is, however, an interesting fact floating on the Internets. I’ve mainly traced this back to Dave Ramsey, but I like it so we’ll go with it. McDonald’s found that customers spend 47% more on fries and apple pies when using plastic purchasing power. I’ll have 47% more fries to go with that shake, doll-face! Show of hands; who thinks this only applies to Mickey D’s?
An interesting conundrum…do I swipe or do I don’t?
The envelop system helps manage those variable expenses that can torpedo your monthly budget. My big three are groceries, gas, and gotta-dos (miscellaneous items too small to warrant their own line item). Additional variable expenses may include:
You may have a few more. The key is, when creating your budget, you want to allocate a maximum dollar amount to each variable expense category. Envelops help keep you honest! Take an envelope for each variable expense, drop in the allotted cash for the month, and let the good time roll (or not). When the cash for the particular envelop (i.e. expense) runs out, stop spending in that category.
Let’s address the potential complaints (We appreciate WonderMan for his contribution to this section).
I tried the envelop system for two months. I’m happy to report that I stopped going over budget in the food category immediately. I even noticed a 20% reduction in spending on variable expenses overall.
So why did I return to the debit card? Two reasons. 1) I was being lazy. 2) The habits engrained in those two months of pre-thinking my purchases, limiting my run-by grocery trips, and learning to say no when I reached the budgeted allotments actually became a new functional norm. Envelops ROCK!!!
Give it a try it. Who’s down for a little Old School Envelop Action??? April is right around the corner.