Are you looking for new cashless budgeting methods to try? Everywhere I look I see people raving about the cash envelope method – there is no doubt that cash envelopes work well, I used them for 6 months during my study abroad trip. But, keeping cash around and tracking it can become a hassle for some and budgeting is meant to simplify your life, not make it harder. By finding the perfect method for yourself and your lifestyle, your budget will become more sustainable. So for those of you who want an easy cashless method, this article is for you.
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- How To Use The Cash Envelope Method
Why Cash Envelopes May Not Be The Best For You
“Cash is king”– not always! There is no “correct” way of budgeting! Everyone’s finances, lifestyles, and personalities are different. Cash envelopes might work wonders for some of you, and for others they might be an epic fail. If you fall into any of the categories below, you might want to start incorporating cashless budgeting methods.
- Afraid of carrying the cash with you – If you are worried about carrying your daily expenses in cash form, cash envelopes might not be the best option for you.
- Difficulty accessing a bank – If you’re unable to easily access a bank for your cash withdrawals, you might want to try a cashless budgeting method.
- You don’t want to miss out on the credit card rewards – I personally love my travel rewards credit card. I have been able to take numerous trips for free due to my use of it. If you still like to accrue credit card rewards, try the alternatives listed later in this article.
- You do most of your shopping online – If you purchase most of your items online, it can be difficult to incorporate the cash method.
- You miss out on the returns of a high yield savings account – having your money work for you by using a high yield savings or money market account is one of my favorite financial tips. By withdrawing one months worth of expenses at a time, you will be accruing less interest in your bank account.
- You want a method that’s easy to combine with your partner – It can get quite difficult to have both you and your partner track your expenses accurately with the cash envelope method. This is where tracking apps like Mint really simplify budgeting for a couple.
- Cash is dirty – if you’re a germaphobe, you might not want to constantly be dealing with cash.
- You’re anxious about holding up the line – I get so nervous about holding up the line when I have to calculate the exact change when I’m buying something! Is anyone else like this? Using debit/credit cards is faster and not as stressful for me.
- There is no record of your purchase – With credit and debit cards you can find your statements from years prior whereas there is never a record of the cash you spent. If you forget to record your cash purchase on your tracker, it is lost forever.
- Harder to be prepared for emergencies – You never know what might happen out on the road. Maybe you’ll run out of gas and you forgot your gas cash envelope, what will you do? Even if you use the cash envelope method, I recommend carrying a credit card for unpredictable emergencies like this.
5 Easy Ways To Budget Without Cash
I personally cannot stick to cash envelopes, I have tried but they require too much effort for me to maintain. My budgeting approach is more “set it and forget it”. I like to be able to let my budgeting happen behind the scenes without having to invest lots of time into it.
If you’re like me, you might want to consider some of these cashless budgeting methods:
- Carry around spending trackers- The Budget Mom has cashless envelope trackers you can carry around with you and record your expenses. This method allows you to immediately categorize what you purchased and be reminded of your remaining budget.
- Digital cash envelopes – there are numerous apps out there that can digitize the cash envelope method. Some of the best ones are GoodBudget, SimpleBudget, Mint, and much more.
- Spreadsheets – You can make your own Excel spreadsheet catered to your expenses. This is extremely customizable and absolutely free! You can also use Google Sheets so you always have access to it on your phone. Here are some free spreadsheet trackers you can use!
- Checking account limit – For debit card users, if you only allocate a certain amount to be in your checking account every month, you will be limited to how much you can spend. This is a great starting point for your budgeting journey. You can also set low balance alerts at most banks.
- Prepaid debit cards & gift cards- This is similar to a cash envelope method! You can dedicate one card for each expense bucket (i.e. one for groceries, one for eating out, etc). Then, you can allocate a certain amount of money for each card so you never go over! Here’s a list of some of the best prepaid cards. You can also use this method with visa gift cards you can buy at your local grocery store!
Trial & Error
Don’t be afraid to try a number of these different methods until you find one that truly works for you. Budgeting shouldn’t be a hassle and is different for everyone. Choose the method that is most effective for you, and stick to it.
I am currently trying the Charlie app to track my expenses. The chat box personalizes the system and makes it more enjoyable. I will report back to you in the future to let you know if I ended up incorporating it as my full time app!