MY CASH ENVELOPE CATEGORIES | Budget Tips + Cash Envelope Method

welcome to the budget mom youtube channel i'm kamiko love from thebudgetmom.com and today we're going to be talking all about my cash envelope budget categories now the reason i wanted to hone in on specifically my cash envelope budget categories is because i get hundreds of questions about this every single day from how do i know which budget categories to use for cash envelopes how do i know the amount to stuff in each one of those budget categories what do you use your budget categories for for your cash envelope for instance does your food category include eating out and grocery shopping so today i'm going to be answering a lot of those questions but also going over my budget categories how many i have and what i use those specific envelopes for so right now currently in my life i have seven cash envelopes that i use technically six one of my budget categories is cashless so first let me explain why i started using the cash envelope method and why i feel it's so important especially if you are just starting your budgeting journey so i started using the cash envelope method probably back around 2016. and it was definitely an eye opener when it came to my spending the number one thing that it did for me is it allowed me to hone in and control my spending when it came to my budget more importantly help me with overspending in my life and really hone in on what i call leaky spending throughout my day-to-day purchases so i started in 2016 and at that time i started with two cash envelopes only i had a food envelope and i had a fun envelope shortly after that i introduced a miscellaneous cash envelope into my life and we'll go into the exact purpose and how that fits into my budgeting method and my strategy so today i'm going to go over first off how do you know what budget categories to have for cash envelopes so with the cash envelope method it's really important to understand that cash envelopes are used for your variable spending only sometimes i get the question will miko if i pay all my bills and cash that seems like a lot of work i gotta go put money in the bank then pay the bills that's not how it works your fixed expenses can be paid online for instance all of my month to month fixed bills and expenses i have on auto pay right this makes your routine your method more efficient you don't have to worry about oh did i pay that bill maybe you're on vacation you don't have to worry about that have your fixed expenses on autopay or pay them online your cash envelopes are used for your variable expenses what is variable expenses these are expenses that fluctuate from month to month they're not set in stone some examples would be fund purchases food gas clothing sports activities all of those are expenses that you see like this with your spending variable spending is the hardest thing to control because it's unpredictable well we say it's unpredictable but here's the thing we can change the unpredictable to the predictable by giving ourselves a realistic limit in our lives when it comes to that spending how many cash envelopes should you have when you are first start out with the cash envelope method it's important to realize that you should not have cash envelopes for every single category in your life it can get very hard to manage and it can get to a point where it can get frustrating or it might feel overwhelming to do it that way i would say this in order to know what budget categories to include for your variable cap your variable cash envelopes you first need to know where you're spending your money you have to track your spending and i recommend tracking your spending manually for at least a month or pulling and looking at past bank statements wherever there is money movement in your life whether you're spending cash whether you're spending on a credit card whether you're spending on a debit card you need to pull statements from all those areas because remember you're trying to get an overall picture of your spending in your life from there you need to separate your fixed expenses from your variable expenses and really focus just on those variable expenses and the number one question you have to ask yourself is what are my problem spending areas what are the areas in my variable spending that i feel like i overspend or i have a hard time controlling those are the categories you want to focus on for your cash envelopes why the cash envelope method is all about physically seeing how much money you have to spend in that specific category it makes you ask the question okay this is all i have left to spend you can see it physically in front of you if i spend this money now what am i giving up in the future now this is not about restriction this is not about restricting you it's a constant reminder that you are spending less on the things that you don't value so you can spend more on the things that do bring you lasting value and joy in your life okay it's a reminder to say hey all right i set my budget for a reason to these limits i need to stick to this and the cash envelope method is just a way of physically seeing that in front of you now i do get the question can you still get the same benefits going cashless say swiping a debit card over using cash envelopes some people say miko i really just don't like having cash on me that's fine but the biggest benefit to the cash envelope method is physically holding that cash in your hand it's a lot harder to hand someone a 50 bill than it is to swipe your card that's the big benefit of the cash envelope method so yes you can still be 100 aware of how much you have to spend in a category by going cash list but you're really going to lose that physical benefit of having that cash in your hand so let's go over my budget categories now i currently like i said i have six and i'm going to be showing you my wallet and my cash envelopes and we'll be going through what i specifically spend my money on because my cash envelopes serve a very specific purpose in my life i set these up in a way to give me what i call financial stability and what gives you stability in your life with your budget with your finances is the freedom to have options the freedom to choose how you spend your money the freedom to decide when to spend your money the freedom to decide what you're spending your money on but the biggest one is how you spend your money so it's not about getting backed up into a corner and feeling like you only can use debt to fund a purchase that you want and i'll be showing you how this gives me financial stability so let's look at my cash envelope categories so right now you're looking at the wallet that i use i have the tbm filofax wallet and this is how i love it because it has this six ring binder system in it it can come out of your wallet and i'll put the link to this wallet if you um like this wallet in the description of this video so first things first for the categories that i'm not using a cash envelope i call this the cashless envelope method i use a spending tracker that looks like this so there's no cash involved i'm swiping my debit card but i love these spending trackers because it allows me to see okay how much my category is much my budget limit and i'm able to know at all times how much i have left to spend in that budget category which is my gas category so you can see the dates in which i bought gas how much and right now today i had no i have 141 dollars left this is awareness this is great you can still get that benefit of awareness and analyzing the consequences of your spending by having a spending tracker like this so that's my guess now this is strictly for i know it's labeled gas but this is for gas or any type of car expenses whether that be an oil change whether i decide to go to a car wash it all goes on this tracker now the next envelope i have and i'll go ahead and open this up here the next envelope i have is my miscellaneous category cash envelope this is what gives me stability in my life what do i use my miscellaneous envelope for this is for all unplanned and unexpected expenses in between my pay periods okay now the question i get with the miscellaneous category and a question in general is mikko what happens and how do i spend money on an unplanned unexpected expense that is outside of my emergency fund so it's not a true emergency but it's unplanned this is what the miscellaneous envelope is for now you can see on this envelope i have a hundred dollar limit and i haven't spent anything so there should still be a hundred dollar bill in there which there is so i give myself a hundred dollar budget now keep in mind these are a monthly budget because i currently budget my money every single time i'm paid which is the on the first of every month so my envelopes are supposed to last me the entire month and we'll be talking about if you get paid multiple times a month at the end of this video and how to handle that with the cash envelope method but so there's my miscellaneous for unplanned unexpected expenses in between payday for example maybe a girlfriend called me and she said hey i'm in town do you want to go to dinner well that wasn't planned but i have my miscellaneous envelope for that purchase if it's outside of my food budget if i don't want to spend my food budget for that all right the next one that i have as part of my categories is my fun envelope this is for all fun activities um in my life so i currently have a hundred dollar budget for that every single month and right now you can see i spent fifteen dollars at the movies i saved some money for a savings challenge and i'm currently down to eighty dollars and you can see that in my envelope right away eighty dollars so fun my fun cash envelope all fun activities going to the lake movies sometimes my fun envelope will even include food purchases and what i mean by that is if i go out to a park with my son and we get ice cream afterwards i might take that from my fun envelope now the next category i budget cash envelope i has is my beauty this includes if i go get my nails done my shampoo my conditioner my lotion my eyebrow pencil if i want to get an eyebrow pencil that is my beauty now this is technically health and beauty category for me so all health purchases as well so i currently have a 50 beauty budget so you can see that i went and spent my beauty i treated myself i had the cash in my beauty envelope and i went and got my nails done so um that's what my beauty envelope includes the next one is my food now i get a lot of questions um a lot my food includes all eating out in all grocery hauls for groceries here at the house now i have some people who ask me that say food includes also like if you go to costco and also get household items some people don't like to separate out the receipts or do separate transactions so they include that in their food category as well that's totally fine it's whatever is easiest for you but for me mine is only eating out and for groceries i currently have 450 and you can see throughout the month as i'm spending money i'm tracking it here on my cash envelope why do i track it on my cash envelope and also on an expense tracker the purpose of your cash envelope is for one thing only and that's to let you know how much you have to spend specifically in the category that's it so you need to track your balance as you spend kind of like a check ledger but i currently have 250 dollars left you can see that in my envelope here so that's my food category the next one i have is pets now this is for anything to do with my cats or my dog toby could be food this is mostly my cash is mostly spent on toys and treats for my animals because i do have this cash budget is for 50 but my pet budget is actually 250 a month but i have a chewy subscription that i have that comes out of my checking account so on my budget my budget that i write out every month will say 250 but the cash that i give myself to spend outside of just their food and cat litter is here in a cash envelope 50 a month is what i give myself for any type of treats or toys for the animals next is my household category this is for all household related items so this toilet paper paper towels candles cleaning supplies any of that i do 80 a month for that category um i currently have sixty dollars left and you can see that here in cash in my cash envelope so that's what i spend in my house category so this is what my specific budget categories look like in my life okay so the first thing i want to mention when it comes to the cash envelope method yours will look completely different than mine what you spend out of your cash envelopes will look very different than mine and anybody else's remember your spending and your budget is a hundred percent unique to you maybe for your food cash envelope yours includes only eating out maybe it only includes grocery hauls maybe you have a cash involved for two both of them because eating out is a problem spending in your budget so it really depends and that's why tracking your spending is so important so let's talk about now i stuff my cash envelopes every single time i get paid so i currently get paid on the first of every month which means that i pay i all my bills are set on autopay i go down deposit get my paycheck and pull out cash for my cash envelopes okay that's part of my budgeting routine when i of payday if you get paid multiple times a month does that mean you are stuffing your cash envelopes multiple times a month yes so my biggest thing i hear is mikko i get i have a spouse we both get paid weekly and on different weeks which means i am budgeting every single week it's a lot to run down to the bank and pull out cash every week for my cash envelopes so that's where you would combine paychecks if you could where you are budgeting twice a month instead of four times a month but i used to get paid on the 5th and the 20th of every month which means i was stuffing my cash envelopes twice a month every single time i get paid remember your budgeting period or your tracking period or your pay schedule it's like hitting the reset button new budget new spending limits new cash envelopes now i personally like to use new cash envelopes every single time i paid it's what brings fun into my budgeting routine for me is using pretty cute cash envelopes i enjoy doing that in my for my budget um the ones i showed you today are actually our ladybug theme cash envelopes that just they're printable you can make them at home i'll link the video right now on how i make my cash envelopes at home if you get decide to get the printable version um but that is a little bit more about my budget categories what i spend my money on from those budget categories how i figure out now let's before i before i end this video let's talk about mikko how do i know how much to stuff in my envelopes how much cash should i pull out well when you are tracking your spending you're going and you add up all of your different spending categories after tracking your spending you're going to see realistically how much you're spending in each of your categories and when i track my spending i like to highlight like transactions in different colors all my clothing purchases are in purple all my food purchases are in blue and then when i'm done tracking my spending for that period i add up all the pink ones i add up all the blue ones that's how you develop your budget categories and that's what gives you a realistic starting point of how much you are spending in those budget categories start with what you are realistically spending remember you can tweak and decrease and get your budget to a point that you want in incremental achievable steps as you move forward but you need to start at your realistic starting place so if i track my spending and i see i'm spending a thousand dollars a month on food that's where you need to start and if you're saying in your mind man i really need to get that down it needs to be really about eight hundred dollars a month then you take action in your life to decrease that that category maybe that's meal learning how to meal plan utilizing the food you have at home buying generic having a dedicated shopping list there are things in your life that you can tweak and perfect to get it down to what you want so how much you stuff for your cash envelope depends strictly on your realistic starting place when it comes to your actual spending if you found this video helpful please like it and don't forget to subscribe [Music] okay [Music] all right your no toby sit sit sit [Music]

Channel: The Budget Mom

Views: 11,128

Rating: 4.9718308 out of 5

Keywords: budgeting for beginners, cash envelopes for beginners, cash envelopes wallet, cash envelopes categories, cash envelopes system, the budget mom, cash envelope system categories, cash envelope method, budgeting your money, budget tips, budget by paycheck, cash, filofax wallet, tbm, cash envelopes, envelope budget system, cash envelope, cash envelope system, cash envelope wallet

Id: tD53-4d5abo

Length: 18min 48sec (1128 seconds)

Published: Sat Jun 19 2021