The idea behind using cash is that it hurts to hand over that hard-earned cash. Right? There’s very little pain to swiping or inserting the credit card or debit card and not really calculating how much you have just spent. With the envelopes, you have to pull out the actual bills and hand over never to be seen again. By using the cash envelopes, you can see how much is still in the envelope and change your spending patterns accordingly. You will discover that you can live on less than what you thought! You will actually be able to give more generously, too! When you have the cash system in place, handling money will be easier. Before, you might have felt that you never had any money. Most likely, you probably didn’t. Whenever you spent anything on yourself, you might have felt miserable. Now, that you have a blueprint on hand, telling your money where to go, with money designated for you and your spouse, you won’t have any problem spending it and having fun! This is such a liberating experience!
Here is how you’ll set it up.:
You are going to have to get either five paper envelopes or a plastic accordion wallet. Label each pocket with your five categories. Next, place the amount you’ve allocated for the month in each envelope/pocket. Now, whenever you have to pay any of the expenses from these categories, you will take the money out of the envelope. When the money runs out, you cannot spend anymore money from that category. When it’s gone, it’s gone. If you use money from one of the other envelopes, you are going to be short in that category. This is why it is imperative to use the Money Blueprint and the Money Blueprint Binder.
If you search the web for DIY Money Envelopes, you will find several ideas on making your envelopes. You can download the template for the envelopes pictured above here. Alternatively, you can always buy the wallet and envelopes from the Dave Ramsey website.