If you follow any money advice, you are usually taught about using cash and implementing the cash envelope system. That is what I recommend here on our site.
As much as this is the perfect solution for our family (and one of the catalysts to help us kick-start our debt pay-off plan), I also understand this is not an option for everyone. Even if you don’t use cash, you still should budget and spend as if you do.
The way to do this is by using a cashless envelope system. It is how to use cash envelopes without using cash. The idea is simple, but there different ways to track it.
HOW DOES IT WORK?
The idea is the same as the regular cash envelope method. You have a budget and need to ensure you don’t spend more than what you should.
Each pay period, you record the amount budgeted for each category onto your “envelope.” As you spend, you keep track of it. When you are out of money – you are done spending.
Using the cash envelope system without using cash can work – if you want it to.
WHY IS THIS METHOD BETTER?
When you are trying to get control of your finances, you need to know where you spend. The best way to do this is to track your spending. Not tracking after you spend – but as you purchase.
Most of the time, you swipe your card without worry. This action can easily throw your budget out of balance.
While using cash has emotion attached to it, tracking every purchase requires awareness. You are always watching what you spend and where. There are no surprises that you spent $250 on groceries when the budget was $200. You see it happening right in front of you.
The cashless envelope system works because:
- You don’t have to worry about carrying or getting cash.
- It forces you to track of your spending in real time.
- You can see exactly where your money goes and make budget adjustments as needed.
The cashless envelope system forces you to be more responsible for your spending without the hassle of carrying money.
CASHLESS ENVELOPE SYSTEMS
When you are ready to try a cashless system, you need to determine which is the best for you. You can find one on your phone, or there is also a printable option.
CASHLESS CASH ENVELOPE APP
There are several apps that claim they can help you keep track of your spending with virtual envelopes. If you have found one that works well for you, then I say keep using it! But, if you are new to this idea – or want something new – the one I recommend is Mvelopes.
Mvelopes has three different plan levels, starting as low as $4 a month. You can use the one that best suits your needs. If you are new to the platform, I recommend starting out with the basic plan.
To start, you will add the app to your phone — or you can use their online site (which I love). Once you do that, you sync your various accounts. Make certain to include the cards you will use for your various categories.
For example, you may charge every purchase to your credit card to earn rewards or cash back. If this is you, you will connect your credit card. Some may use the debit card for some purchases and a credit card for others. Those of you who do this will connect both cards to your account.
Once that is done, you set up your online envelopes and add budgeted amounts to each. Then, you just swipe as usual. Every time you make a purchase, the purchase amount is deducted from your online envelope. With a couple of swipes, you see not only how much you have left to spend, but even where you spent your money. There is no guessing.
This system helps you give every dollar a job. You know where it will go even before you spend it. Using Mvelopes puts you back in control.
If you want or need even more help, Mvelopes has other plans that you can purchase. They offer the Mvelopes PLUS plan for $19 per month. This service includes all of the services available under the basic plan but also helps you tackle your debt. You even receive you a personal finance trainer who will visit with you once per quarter. This plan helps you set and achieve your financial goals.
Should you need more one-on-one help, you may want to consider the Mvelopes Complete package instead. You get all of the benefits of the Plus plan but receive your own, one-on-one finance trainer. This coach works with you to help you achieve your financial goals. You aren’t left alone to figure things out as there is someone right there, guiding you along the way.
As I said you don’t need to purchase one of the larger plans as the basic plan will meet most people’s needs. However, it is great to have these options available at your fingertips.
Related: The Best Apps for Your Budget
CASHLESS ENVELOPE PRINTABLE
Apps are great, but there are times when you would rather have the simplicity of writing something down rather than having to pull it up on your phone. That’s where the printable cashless envelopes come in handy.
These work in the same way as regular envelopes — just without cash. Print them off and keep them handy. Record the budgeted amount for that category at the top. Then, as you spend, keep track of it. Jot down every purchase and keep a running total of how much you have left to spend.
I get that it is a pain to keep track of “cents”, so I recommend you round up. For example, if your grocery budget is $200 and you spend $105.74, record that you spend $106 and have $94 left to spend. That is MUCH easier than keeping track down to the penny. (Truth be told, this is what I do with our cash envelopes too).
Once you reach your spending limit, then you are done with that category! If you budget $100 for dining out and there is just $5 left, don’t pick up that coffee and cake for $7 – or you will have just busted your budget! If you find that you are always out of money for select categories, or often have money left over for others, then it may be time to make adjustments to your budget.
Grab your cashless envelope printables. Now, I don’t recommend you print this onto regular paper, as that is really thin and will tear easily. Purchase card stock to use to print out your cashless envelopes as they will be more durable.
Even if you don’t want to use cash, it is still essential that you continue to track your spending, so you never exceed your budget.