Why is an envelope system popular
I would rather not use an envelope system. As the manly Money Bacon Guy I would prefer to think that I can handle money in any situation and in any form. If I want to pay with a credit card, debit card, gift card, IOU or Cash then it should be my choice. How is having money in an envelope system going to do anything to change my behavior?
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This guy I listen to named Dave Ramsey is a non nonsense financial fundamentalist. I say that in the nicest way. I think he does a good job of telling it like it is. If your broke friends think your crazy then you must be winning with money. Just before the new year I talked about my envelope system in the week two update. I was completely confounded by the whole concept of using cash.
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Goals that I am setting for 2015 are as follows:
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The envelope system changes you
Cash takes you time to spend and leaves you feeling exhausted. That's been my experience. And let me tell you that if it takes energy to spend money then you end up spending less of it. It's a pretty simple equation. I have had ten transactions from the envelope system in the last month. I have made two deposits and made eight withdrawals.
My expenses have been thought out and deliberate. I deposited most of my cash from the last paycheck. I made payments that are necessary and budgeted for. As an example: I paid Verizon $75 for my cell phone and bought a $25 gas card that filled up my cars tank. I am pleased that the envelope system has changed things for the better.
Spend cash and feel the pain
My audio financial advisor, Dave Ramsey, says spending cash creates a pain response every time. I have to say I agree. I would like to go into that feeling in a little more detail. It's not like the ouch pain of stubbing a toe. Its a pain like my head had when I learned something in school, or tried to.
Spending one hundred dollars of my two hundred in cash is like learning math. I learn that 200-100=100 and the new lower number is creates a pinching in my head. Knowing that the resource of cash is becoming scarce makes me want to conserve what I have and create the maximum benefit with what I have available.
Why is an envelope better than plastic
There is no doubt in my mind that using plastic like a credit or debit card is an easier way to pay for things relative to cash. In fact, someplace don't even accept cash. Southwest Airlines and most other airlines have a 'Cashless Cabin'. Money Bacon Guy enjoys a beer on a flight. Fortunately I always seem to find those free drink coupons before my flight. I digress.
Paying with a card for things online has become commonplace. What I had to relearn about cash is that it is a limited resource. Have you ever run out of cash at the end of a month? If you haven't then your not doing a zero budget. Or your not budgeting at all and the credit card is supporting you. An envelope system is like a good friend. It will always tell you when your done spending.
The new year is here and I have one goal
I'm not big on new year resolutions. Goals however are essential for your success. How are you or anyone for that matter going to know when they are successful if there are no goals by which they can measure themselves by.
My challenge to you now is to review your financial situation. Determine what you can do to create success in your life. Set goals and mark them as complete through the year.
