One of the biggest hangups for people, when they try to budget and pay off debt, is actually sticking to the budget.  They make a written plan and have the best intentions of following it, but then something happens during the month that totally throws everything off.

Maybe there was an impromptu girl’s night out that should have meant splitting an appetizer and drinking water, but you only live once right?  Bring on the full entree and dessert!

Or you went shopping, forgot what you bought at the first store you stopped at and ended up doubling what your clothing budget actually was.  Whoops!

Sticking to the budget can be a really challenging thing, especially when you are first starting to try it.  You make this awesome plan, you have really good intentions, but there is just this disconnect between the paper and what happens in real life.

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How do people actually stick to their budget?

Well, I will tell you this little secret that actually took me years to fully implement.  I honestly thought I didn’t need it. Man, was I wrong!

The game-changer for you is going to be the cash envelope system.

What is the Cash Envelope System?

You may have heard of this before, but it is as simple as it sounds.   have cash, it’s in envelopes, you spend the money and then it’s gone.

Every month you decide how much money you are spending in certain categories of expenses.

Common Cash Envelope Categories:

• Groceries
• Restaurants
• Clothes
• Entertainment
• Car Repairs
• Child Care
• Toiletries
• Cosmetics
• Fun Money

How the Cash Envelope System Works:

Once you have decided which categories you are going to use cash for, you set up your envelopes.

At the beginning of the month, you decide how much you are spending in each of those cash categories.

Create an envelope for each category that will house all the cash.  It really can be as simple as writing the name of the category on the front of a basic white envelope.

Go to the bank and take out the exact amount of cash you want to put in each envelope and put the cash into its envelope.

Then, throughout the month, you carry these envelopes with you and when you need to make a purchase, you use the cash from the envelope.

You do not use a debit or credit card.  Only the cash.

When the cash is gone, it’s gone.  There is no risk of overspending because you will know when you run out of money.  It will be gone! This is totally impulse proof and excuse-proof. If there isn’t any cash in the envelope, that means you have hit the limit you set for yourself when you created your budget, and you are officially done spending money in that category until next month.

What if I forget my envelopes when I am out shopping?  Can’t I just use my debit card and reconcile stuff later?

Well, I guess you can do whatever you want, but I guarantee this is how you will go over budget.  

If you forget your envelopes, you should not be making purchases.  Your best bet is to scrap the shopping trip altogether, or go home and get the envelopes and then go shopping.

I feel uncomfortable carrying that amount of cash with me, what should I do?

I totally get this if you are in a sketchy area or just uncomfortable in general.  Truly, the cash envelope system will be the best way to go. BUT, I eventually moved away from that (once I got my impulse spending under control), and I now use the cashless envelope system.

If you find you are too nervous to carry cash with you, the cashless envelope system may be a good option.  However, if you have zero self-control, you should be using the cash envelope system first.

I’m not kidding when I said it took years for me to finally understand how powerful this is.  If you don’t set black and white limits for yourself in a system that allows zero wiggle room, rationalizing or excuse making for you to sabotage yourself, you will continue to fail with budgeting.

We are too good at making excuses and coming up with the reasons our spending habits are okay.  If you are truly serious about changing and sticking to your budget, you need to be using the cash envelope system.

This system is “you-proof.”  If you are like me at all, you can figure out ways to outsmart the budget you created and then you outspend the budget you created and get mad at yourself at the end of the month.  

When you have a set amount of cash in the envelopes and that is all, your limits are there.  They are tangible. You will have no questions about when you should stop spending because you will have to stop when the money is gone.  Period.

This is the ultimate way to control your spending.  And what’s crazy is, this is how your grandparents used to live.  All anyone used to use was cash and when it was gone, they couldn’t spend any more money.  People didn’t have debt!

We have veered so far off this path, it has caused us so many problems.  Let’s get back to the basics and start using the cash envelope system. You will thank yourself, I promise!

I challenge you to start using this system for the next 3 months and see how much money you are saving by not blowing your budget.

Don’t have your budget set up yet?

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