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Cash Envelopes For Couples

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Using cash envelopes can be a huge financial blessing for singles and couples. Many people steer clear because they’re unsure how to make them work in their relationship.

Here are 4 great tips to help you get started. My goal is to get you to use them because they have saved us money, time, and financial stress for years.

How do they save money?

You can argue cash envelopes won’t work for you but until you try it your point is moot. Keep an open mind, listen to our experience, and consider the benefits to your financial health.

To show how cash envelopes save money I considered pointing to some Ivy League study, but I’ll keep it existential since it’s what I know.

Using cash sets limits in each category. When the money in each category is gone, it’s gone. You preconceive how much you’ll spend rather than just spending whatever you have. I call this “telling your money where to go instead of wondering where it went.” Define what categories work with cash and create those envelopes. We have five: groceries, miscellaneous, clothing, dining out, and entertainment. We each get $300/month total; when it’s gone, we stop spending. If we don’t spend it all, we carry it over and withdraw less for next months envelope.

Using cash hurts more. Try it and you’ll see. I still remember the first time we took our grocery envelope to the store. Each item placed in the cart went through a rigorous screening rather than tossing in whatever we wanted. Things we needed went in regardless; things we wanted were added according to how much was already spent. Turns out we didn’t want many of them bad enough to spend the cash.

It made a big difference in the way we shopped; and it still does.

Cash envelope tips for couples

Perhaps you know cash envelopes would save your family money . . . if only you could figure out how to make it work with your spouse.

This is how me and Betsy have made it work for us:

1. Direct deposit paychecks – do this so you don’t have to go to the bank to deposit your checks every time you’re paid. It saves time, gas money, and hassle. If your employer doesn’t offer direct deposit, ask them to; I did this once and the employer obliged.

2. Define cash categories – what categories work best for cash in your situation? As mentioned above, we use cash for groceries, miscellaneous, dining out, entertainment, and clothing so we have 5 separate envelopes. We each get half the total money allotted for all envelopes each month.

3. Withdrawal once per month – now that you know how much cash is needed for a months worth of cash purchases, withdrawal that amount once per month. This saves gas money, trips to the ATM, and ATM fees (you’re not stuck using a machine that doesn’t belong to your bank).

4. Divide the money – does one spouse do the majority of the shopping and purchasing or is it divided equally? Figure this out and distribute accordingly so you each have enough for all categories.

We used to give Betsy most of the cash for everything but miscellaneous (we both get $100/month for misc. regardless) because she did most of the shopping. Now we’re together most of the time so we split it down the middle. It works incredibly well for us; do what works for you and don’t stop until you find what works. If your situation changes, change your system accordingly.

Give it a shot

Use our experience and tips to test this out for your situation; what do you have to lose? Most folks I know save a lot of time, money, and hassle by using cash envelopes together.

I dare you to prove me otherwise.

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How To Avoid ATM Fees

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Few things burn me more than being charged an ATM fee for withdrawing my own money… so I developed a system that enables me to avoid ATM fees altogether – here’s how I do it.

Use banks with no atm fees

When considering a new bank or credit union, look for one that doesn’t charge ATM fees.  If they do charge fees be sure they have a system in place that allows you to avoid being charged the fees such as belonging to a nationwide ATM network.

Betsy and I use Capital One 360 for our main checking and savings accounts and have been able to completely avoid ATM fees.  Capital One 360 is a member of the All-Point Network of ATMs giving us access to our cash at any Target store nationwide, along with many other locations in every part of the country.  If we need to hit up an ATM we can always find something close.

If you’re interested in Capital One 360, you can read more about their checking accounts here and more about their savings accounts here… or you can read my Capital One 360 review.

Update: Shortly after publishing this article Ally Bank contacted me to let me know that they reimburse all ATM fees our customers incur in the United States, including those charged by other banks!  If you’re interested you can read more about Ally Bank’s Fee-free interest checking here and more about their savings accounts here.  I also endorse them and have noticed they’ve really stepped up their focus on customers over the last few years.

If you are not looking for a new bank then you can employ the final two tactics to avoid or greatly lessen your ATM fees.

Use a cash envelope system

Back in November of 2009 Betsy and I attended Dave Ramsey’s 13 week Financial Peace University course – at our local church – which inspired us to adopt a cash envelope system for several specific budget categories.  For our situation we decided using cash would work best for:

  • Groceries
  • Dining out
  • Entertainment
  • Clothing
  • Miscellaneous

These categories may not be best for everyone so be sure to figure out what works best for you.

We each carry our own cash and manage it in a way that works best for us.  Betsy carries and uses the Dave Ramsey cash envelope organizer that came with our FPU kit, while I stick to a much simpler system of keeping a wad of cash in my wallet and journalling each transaction to keep track of each category.

I only recommend keeping all your cash together if you journal the spending; otherwise you can easily spend much more in a certain category than allotted.  If you’re not going to journal the activity it’s best to keep the cash separate for each category.

Withdraw money once per month

To avoid fees, simply withdraw your cash envelope money once each month rather than hitting up an ATM every time you need money.

Here is a detailed breakdown of how much Betsy and I use for each category:

  • Groceries – Betsy gets $260, Matt gets $100
  • Dining out – Betsy gets $40, Matt gets $20
  • Entertainment – Betsy gets $40, Matt gets $20
  • Clothing – Betsy gets $60, Matt gets $20
  • Miscellaneous – We both get $100

If you do the math you’ll see that we need $760 total, so at the beginning of the month Betsy and I head over to Target and withdraw the entire amount.  You may have noticed that she carries a bit more in several of the categories than I do; that’s because we’re usually together and it works out best for us.  I carry my own grocery money for when I have to run to the store by myself to pick up a few odds and ends.

It’s also worth noting that Capital One 360 has a $1,000 daily ATM withdrawal limit; keep that in mind if you use or plan to use Capital One 360.  Otherwise be sure your cash envelope amount fits within the daily ATM withdrawal limit of your bank.  If the amount needed exceeds the daily limit simply go to the ATM twice each month, once in the beginning of the month and once in the middle.

What tactics do you employ to avoid paying ATM fees?

Using Cash [It’s the Only Way to Go]

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More and more people are giving up on credit cards. Sick and tired of the endless bills, late fees, interest rate hikes and annoying spending requirements, there is a growing movement of “cash only” consumers. Some are going a step further and getting rid of their bank accounts in addition to their credit cards. No interest is a small price to pay compared with the cost of high fees. Cash only living has the advantage of protecting cash from digital thieves, who are becoming much more sophisticated. Another advantage is eliminating the time it takes to manage a checkbook every month.

People who live on a cash-only basis do not have to wait for checks to clear or for credit card balances to be charged. Paying for everything in cash eliminates all of the time spent waiting for the financial system to move money from one account to another. Living a cash only life has many advantages, especially for recovering spendthrifts or compulsive buyers. Cash only offers several advantages to the newly or established frugal consumer. Aside from the loss of both convenience and hassle, cash only living can help people gain control over their financial lives. Here are four big advantages that convince many people to go cash only and bank-free.

Using cash makes budgeting easier

With a cash only budget, it is easy to keep track of every expense and how much money goes to that expense each month. Running a budget is much simpler when credit cards and bank accounts are eliminated. Every single expense can be tracked, and the various small expenses that can sneak up on even the most careful budgeter are eliminated. A budgeter on a cash only financial diet is often surprised by the savings that can result. Going cash only provides an incentive to minimize expenses, which can itself lead to a more fruitful experience.

Using cash reduces debt and stress

Living a life without any debt or even the prospect of debt is liberating. The legal apparatus associated with debt can be intimidating, such as debt collectors, bankruptcy courts, debt management agencies and credit counselors. Avoiding debt altogether by going cash only can be a great stress reliever. Paying for everything in cash gets the budgeter control of his money instead of having his money control him. Being at the mercy of credit card companies is a very unpleasant experience. Cash only eliminates the many pernicious forms of debt and makes financial affairs less of a burden.

Using cash can lead to happiness?

In this modern world of one thousand and one entertainments, it is easy to lose track of the important things in life. An extravagant spending lifestyle is often financed by debt, and getting rid of the debt and the credit can reveal how hollow this lifestyle is. A family that cuts back on spending has to improvise and find ways to spend more time together. This can improve the relationships between family members. By making the choice willingly, everyone approaches their common situation with a sense of being in it together.

Using cash promotes personal growth

Debt allows someone to live beyond his means. When this is embraced as a way of life, personal behavior tends to deteriorate. Getting rid of the debt, in addition to increasing personal and familial happiness, can result in self-improvement and personal growth. Debt is a tremendous temptation that can ruin inner self-respect and self-esteem. Society still remembers the days when debt was looked upon as practically sinful. Attitudes have moderated since then, but a remnant of the old stigma remains. Going cash only can have emotional, even moral benefits, if done appropriately and for the right reasons.