Why I Hate the Cash Envelope System

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Do you lose track of where your money goes?  Do you use a debit card to pay for items, but have trouble sticking to your budget?  Me too.  It is so easy to swipe plastic!

My husband and I have just started using the cash envelope system after using a debit card for years.  I got my first debit card in high school and have been using it for pretty much every purchase ever since.  However, after going through Financial Peace University, we decided to give the cash envelope system a try.

If you aren’t familiar with the cash envelope system, it is a way to pay for things with cash only where you use envelopes to organize your spending into budget categories. For example, we have envelopes for food, clothes, household goods, and baby food/formula.  The idea is that in order to stay on budget, you can only spend what is in your envelope…

And it is awful!  We just completed our first pay period (two weeks) using this system, and I absolutely hate it.

First of all, when your money is gone, it is gone.

We took the money out of our bank account, so it isn’t there anymore.  In fact, it was scary for us to see the balance in our checking account dip so low after our trip to the ATM.  The money left in the account is just for bills that have direct deposit or e-payment, with a little buffer.

With the cash envelope system, you don’t really have any extra laying around—it is all in your budget envelopes, and it all has a specific purpose for how it should be spent. So when the cash is gone, it’s gone.

When you use cash to pay for things, you have to really keep track of everything you add to your cart.  It would be pretty embarrassing to get to the register and not have enough cash on you!

Now I am forced to meal plan to make the most of my food budget because going over just isn’t an option anymore.  I can’t grab an extra pint of ice cream for a treat if I don’t have the cash on hand.  I can’t just go shopping for new socks if I accidentally dye them all pink in the washing machine—I have to wait until the next payday.

And you know what?  This sucks!

The cash envelope system is inconvenient.

And the grocery store is THE WORST.

I have carefully meal planned to stay on budget.  I have miraculously made it through the grocery store with a 9-month-old, adding each purchase to my total with a calculator (that the baby keeps thinking is a toy), and I know I have enough cash.  Then I get in line and unload my cart onto the checkout belt while struggling to entertain the baby.

Now it is time to pay, so I take out my envelopes.  I have to flip through like crazy to find the one I want while the cashier looks at me with pity.  I pay with cash, and he hands me my change in bills and coins, with my receipt tucked behind my bills.

People behind me in line are waiting, so I push the cart—with the cash and receipt in one hand and envelopes in the other—out of their way.  Before I leave the store, I find a low traffic spot to stand there and shove my money into a tiny envelope.  This is usually the point at which the baby starts crying or screaming.  I just drop the change into my pocket, then try my best to get the envelope stuffed with bills closed and the receipt stored somewhere where I can find it.

It is so slow compared to using a debit card—envelopes get ripped, (baby) tears are spilled, and I leave the store 300% more frazzled than when I entered with my perfectly budgeted meal plan in hand.  It is inconvenient, embarrassing, and awkward.  Not only that, but my husband likes me to write the remaining balance on the envelopes when I get home, essentially giving me homework every time I shop. I hate it.

I can’t buy anything on a whim.

Like a lot of people, I struggle with impulse purchases.  With the cash envelope system, I can’t steal money from other budget envelopes just to buy something over budget.  It would be like stealing from myself, and when I am literally moving cash from one budget to another just to buy something I want, I can’t bring myself to do it.

When I use a debit card, it is easy to take a little from one budget to add to another.  It enables me to spend as I like when I can simply “work out the numbers” when I get home.  For example, I use coming under budget on our power bill as an excuse to go over budget somewhere else instead of saving the money.

With the cash envelope system, the budget is already set, so I don’t get the opportunity to invent my own loopholes in the budget in order to spend more money.

And I don’t like it.

But it’s worth it.

At the end of the day, the cash envelope system is awful on purpose.  It saves our family money by calling me out on my bad spending habits, and its inconvenience makes me want to shop less often and more carefully.

It is the perfect system to close all the loopholes I used to take advantage of my budget.  I don’t like it because it is a tough love financial intervention.  It is uncomfortable to be forced to follow your budget, but it is worth it!

We saved over $50 in impulse buys just in the first two weeks we used the envelope system!  And because I absolutely loathe change, we have decided to put all the coins we get as change into our Disney World piggy bank.  In just two weeks, we have saved $6.74 in coins!

The cash envelope system works for us, and it can work for you, too.  If you commit to using cash, you will have to stick to your budget, be forced to carefully meal plan, and you will cut your impulse buys cold turkey.  It sucks, but it’s great!

For more on how we set up our budget, check out Why You Need to Start a Zero-Sum Budget, and How to Write a Zero-Sum Budget.

Do you use the cash envelope system?  How do you like it?

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