How To Budget Using A Cash System

Budgeting can be overwhelming for most of us, but luckily, there are female entrepreneurs out there that know how to make it not only easy, but cute too!  I recently connected with Sarah, creator of the Etsy store, MissMoneyBags, who handcrafts budgeting wallets designed for those of us using the cash system.

Since I admitted last month that I’m horrible at budgeting (but want to get better!) I enlisted her help to teach us all a bit about using cash envelope systems as a tool to make budgeting easier.  She’s guest posting today about her awesome handmade wallets and using the cash envelope for simpler (and cuter) budgeting!

I love to create! I come from a long line of creatives and married one, too.  I grew up playing with toys made by my grandads, in pajamas made by my mom under quilts made by my grandmas, and slept in the bed my dad built.  Frugality was more of a creative thing than a financial one.

My husband and I have lived frugally our entire marriage of 11 years. He’s the practical nuts and bolts of our team, the blue in my rainbow.  We have 4 kids now. We are master “bootstrappers”,  lemon to lemonade type of people.  We’ve always followed a cash budgeting system,  but it  didn’t seem like we were making ground in the beginning.

My parents had just finished a financial class by Dave Ramsey that  teaches people to use a cash envelope system for budgeting.  My mom is a super cute, fashionable lady.  She was using this boring wallet with paper envelopes.  I decided to save up birthday money to make her a pretty replacement. I made my first wallet out of scraps from my house as a trial run. It was pretty good, but I knew I could do better.  I gave that one to a friend, and started over, changing textures and durability. The next round was amazing! It had this aura, that I was on to something special!

I used to feel stressed buying the kids new clothes, or even getting extra groceries.  No one put the stress on me, I did it to myself. Since we’ve been using the Miss Money Bags cash system wallet, I can literally look inside and see that we have the money for things like clothes. I can see it is there, and when it’s gone, it’s gone.  No big deal.  Each month, my husband and I communicate about our needs for that month and what money should go where, then get the cash. Any wrinkles we might experience have been ironed out ahead of time.  Ahhhhhhh. Sweet relief. It’s a team effort. And we are getting somewhere together!

I am inspired by Miss Money Bags because it is a beautiful sign to me that we are doing something special financially, we are going somewhere unique to us, we are creating a life of blessing, being proactive, changing the world. Really.  And so can you!

Here’s how to use the cash envelope system with a wallet:

– First, do your budget!
Decide what you need and what money you have to work with. Think ahead. It takes a few months of practice so if you mess up the first time, it doesn’t mean it won’t  work. It means you have to work to get there.  You don’t run a marathon the first day!

When you budget, you assign a job (some to spend, save, and give) to every dollar that comes in for the month.  Once every dollar has been assigned, decide which budgeted items will be cash spending.  The rest of the money that is not allocated to cash stays in the bank for electronic payment, like bills, gas, house upkeep, and so on. If you don’t use all of the money you budget, next month you will need to adjust so that each dollar has a job.

-Pick categories for cash that are typically difficult for you to manage, places you splurge:
Groceries
Clothes
Entertainment
Dates
Miscellaneous/gifts
Mine and his (this is cash for each of us to use or save as we like. Isn’t this great?! )

-Keep the rest of the money from the budget in the bank, the bills, gas, home upkeep, and so on.

Now I’m making all kinds of products for people! I make kids wallets with separate pockets to give, save, spend.  Teach them early!  I make refillable journals for people to be good stewards of their hearts. I make keychains for people who are going somewhere.

Some super helpful tips on the cash system:
Dave Ramsey’s book, The Total Money Makeover, gave us practical tips on how to become debt free:  My Total Money Makeover
Robert Morris’ book, The Blessed Life, helped us grasp the urgency to be debt free:  The Blessed Life
Sara Janssen’s blog featuring Miss Money Bags really captures the simplicity of this budgeting idea: Walk Slowly Live Wildly

A note from Shannyn:  I absolutely LOVE these cash wallets- they’re cute, functional, budget friendly and handmade.  Huge thanks to Sarah from Miss Money Bags for this great budgeting tool and for showing us how to use them properly!