Have you heard of the Envelopes Full of Cash budgeting technique wherein you withdraw cash and only are able to spend that money? I started budgeting a few months ago and overall the project has been kind of hit or miss. It is challenging to keep track of how much I've spent while I'm out and about, then I cringe as I'm adding up the totals later. Or, I forget how much I've allotted to each category. Really, it feels more like I'm tracking my spending instead of living on a budget. While I was in Minnesota, I was lucky enough to find some forgotten Christmas money in one of my drawers. I decided to use this as my primary spending money while meeting up with friends, going out to eat, and catching up over drinks -- and I loved using cash again! I loved being able to look in my wallet and to quickly see how much money I had left to spend.
I recently read about using Envelopes Full of Cash as a budgeting technique. When you create a budget, you limit how much you can spend in each area of your life -- groceries, rent, shopping, personal care, etc. When using the Envelopes Full of Cash technique, a person withdraws their limit in each area in cash and then puts it in a labeled envelope. Throughout the course of the week/month/etc., you are only allowed to spend as much as you have in that envelope.
I can see this being a really useful way to budget spending. As I mentioned earlier, cash allows you to see how much have left to spend immediately, instead of when you add all the receipts up at the end of the day. Additionally, I make a lot of purchases that fit into multiple categories. For example, I might go to Target and pick up some groceries, shampoo, and a shirt; this purchase doesn't fit neatly into one spending category. Using cash, I could pull out enough from each category to cover the purchase while accurately tracking my spending.
I think I'm going to give the Envelopes Full of Cash budgeting technique a try. My goal is to be financially stable and I know that I need a better budgeting method. What budgeting method do you use? How does it work?