Thursday, July 7, 2011

Cash Budget

I hadn't thought to write a blog post about this, but last night my friend, KtCallista saw it when we were at a coffee shop, and liked it so much, she wanted me to share it on my blog.

For nearly a year now, Hubby and I have been operating a cash budget for our family spending. We had been having quite a bit of trouble sticking to any sort of budget; even with the watchful monitoring of Quicken, we tended to go over budget by several hundred dollars every month. At one point we'd tried a cash budget, but with no record of where the money went, it was a mess.

Finally, I found the solution: a coupon file that could double as a wallet. We categorized the cash, and divided it between us based on what we normally buy (Hubby puts gas in the car, and I usually pay babysitters), and we allowed for things like coffee or treats for the kids. In each of our files, I set up categories like groceries, gas, dry goods, personal, dining out, and a miscellaneous file. Then we decided how much we would withdraw each paycheck, and I made myself a note to give to the bank with the correct denominations of bills. Every payday, I withdraw the cash and dole it out to the correct pockets in our files.

I thought this would be an onerous task, but it has turned out to be kind of fun. The bank tellers know me now, and I coaxed them to give me a stack of withdrawal slips, so I could fill one out ahead of time and have it ready. It takes very little time, and feels so satisfying to dole out our allotted cash.

The best part is, we have stuck to our budget ever since! When the cash is gone, it's gone. I'll admit, we've had times when the days leading up to payday have been a bit scanty, but it just hardens our resolve to be more frugal the following week so the money stretches the full two weeks. Hubby and I are both so excited to have success in this area where traditionally we have fallen short.

We still use the checking account for bills, of course, and I occasionally use the credit card for a big purchase, or online spending, but only if I know we can pay it off immediately. So far, the cash has worked splendidly for shopping around town, and it makes us choose our purchases more carefully as well.


  1. That's great, Erin!

    As a very frugal mama, married to a CPA who routinely sees the family devastation of over-spending and non-budgeting, I rejoice when I hear of families living within their means!

    It's not always easy, not always pretty..and no, we can't keep up with the Jones' this way, but we aren't called for that. Oh, and as Dave Ramsey says, "The Jones' are broke". :)

    God Bless!

  2. I like this idea a lot. We manage to stick to spending limits fairly rigorously, but I admit that the idea of running a cash budget appeals to me.

    By the way, your kids are adorable :)

  3. I love this idea. So glad that you shared this with me. :)