To keep within budget, we use a cash-only system. Basically, we draw up our budget each month, stuff money in several envelopes assigned with a category, and we're on our way. I should clarify that we do use our debit card for gas and online purchases only, mainly because I don't want to get my little ones out of the car just so I can use cash to pay for gas. Obviously we can't use cash for online purchases, and that can get a little tricky.
If I find a fabulous deal online for say, clothes, I go ahead and use my debit and then take the cash out of my clothing envelope and deposit it in the bank. Maybe more trips to the bank, but ATM's work well for me since I can go there any time.
Using the envelope system, alone, has saved us the most money in our budget. I would say it's the number one thing you can do to save. We know exactly where our money is going instead of wondering where it went. Another very real fact is that people tend to spend less if they have to physically hand over those dollar bills. It's much easier to swipe a debit/credit card, but the act of not handing over your hard earned money tends to make it disappear faster.
Here's the categories we use:
- car repairs
- oil changes
- housing (repairs/maintenance)
- hair cuts
- car license
- office/school supplies
- blow (husband and I each have an envelope to use on whatever we want)
If you use cash, do you find you spend less? How do you budget?
image credit: photoxpress