Financial Literacy Month: The Envelope System

Financial Literacy Month (1)


This system of organizing money is nothing new, but now that online banking features are popular it can be quite fun to do. For those of you who haven’t heard of this before, it’s exactly what you’re guessing- organizing money into envelopes. For people who are focused on using cash, this system is great for keeping track of everything. I gave this a try not too long ago, and found that fiddling with envelopes every time I’m at the register was quite cumbersome. So, I tried using an accordion folder and that wasn’t much better because I found that I still had way too many categories so I was fumbling around trying to figure which category to take the cash from when it was time to pay. After a few months of trial and error, I have found a simple system that works for me. I just use index cards in the zippy portion of my wallet.┬áThe categories I have are:

Miscellaneous: Sometimes random expenses come up that I don’t budget for on the regular since they don’t happen frequently so I lump them all here. Some examples are doctor copays, prescriptions

Clothing: I tend to overlook giving myself space to purchase clothing items, so it’s good to have available if need things.

Holidays: This helps me stick to my budget for buying gifts and holiday items. I don’t use this one on the regular, but when I need it I take the money out and keep it there.

Transportation: I like to pay for my gas in cash, as at many stations in my area offer a cheaper price for using cash instead of a card. Also, if I need to pay for parking or a toll bridge fare, I will have cash available for that without stress.

Vacation: When I take trips, I have a budget to stick to for that adventure! So I don’t have keep this one stocked on the average day, but if I’m doing something fun I keep the money here.

Giving: I found that I am more likely to donate and give if I have some cash available to do so =)

Allowance: This is my spending money that I give myself every two weeks to spend on whatever I want.

Some of these categories are electronic, meaning that I have a dedicated online account for them until I need the cash. And others, I just take out the cash once a month.

Do you use cash on a regular basis? If so, do you organize it into categories? Tweet me or comment to let me know!

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