The Cashless Envelope Method - YouTube

- Welcome to "The Budget Mum" YouTube channel,

I'm Kumiko Love from www.thebudgetmum.com

and today we're gonna be talking all about

the cashless envelope method!

So I know a lot of my readers have reached out and said,

"Hey, I'm no longer using cash

"due to the Coronavirus pandemic."

And even I this month

have done something I've never done before.

I'm actually using the cashless envelope method

and I'm documenting that journey here on YouTube,

in this video as well over on my Instagram account.

So there is a huge "ah-ha" moment,

there was a huge "ah-ha" moment in my life

on my budgeting journey,

and that "ah-ha" moment was becoming an all-cash spender.

Now I have been an all-cash spender for the last nine years,

which means I hardly ever swipe a debit card.

I pay my bills online,

and then I pull out cash for my Cash Envelopes

every single time I'm paid.

In April I decided to make a switch,

just because more and more banks and lobbies were closed,

I wasn't able to go in

and do my normal bank transfers and transactions.

I did have a little bit of worry about cash

and so I decided to try and document

how using the cashless envelope method looks

in someone's real life

and I'm gonna be showing you

what that looks like today in my life,

and what it looks like for me in April.

(upbeat music)

During this process I realized

how much I love using cash.

The reason the cash envelope method works

is because your spending becomes real.

Your budget becomes tangible,

especially if you're a visual person.

It makes you ask the hard questions around your spending.

All of a sudden you head to the grocery store

you're not just swiping you debit card

and not knowing the long-term consequences of your spending.

All of a sudden you know right in front of your face,

"Okay, I only have $20 left in cash,

"this what I have left to spend

"and once it's gone it's gone."

The cashless envelope method,

even though it doesn't have some of the same benefits

as using real cash,

there are still a lot of benefits.

And one of the huge benefits is,

you're bringing financial awareness into your life

because you are still tracking your spending

on a tracking card.

So let me show you what the cashless envelope method

looks like in my life and what it's all about.

So the cashless envelope method

really does look similar to using the cash envelope method.

Instead though, there is a little bit of a difference.

As you can see in my wallet,

I no longer have cash envelopes,

I have tracking cards.

Another difference you might be seeing in my April budget is

when I'm doing and using cash, I have two expense trackers.

I have one for my checking account,

and one for my cash spending.

But while using the cashless envelope method,

everything is coming out of my checking account,

which means now I am down to just using one expense tracker

for my checking account.

Now, that means that

I have bills coming out of my checking account

as well as my variable spending from my cash envelopes.

Now my cash envelopes are still created on my budget

and I'll show you that here.

So this is my April budget,

and you can see here,

that I still came up with category limits

for all of my envelopes just like normal.

So I have $400 for food,

$75 dollars for fun,

$200 dollars for gas,

$80 for beauty,

$100 for miscellaneous

and $80 dollars for household.

Now, sorry, this was actually my rough draft,

this is my finalized budget.

So I have everything still mapped out,

just like I normally would in my cash envelope budget,

except, instead of using cash envelopes,

I'm using trackers that look like this.

Now I have a tracker

for each one of my different variable spending categories,

or my cash envelope categories,

and you can see that for example,

for food, just like on the back of your cash envelope

you track your spending so you have an updated total

of how much you have to spend in that category,

instead of tracking it on the envelope

you're going to track it on an expense tracker

or spending tracker that looks like this.

Now you can get these in my shop,

I will put a link in the description of this video

for these spending trackers,

but these are the ones that I'm using this month,

in the month of April.

So you literally write down your spending,

if you are spending in your cash envelope categories.

Now you can probably see I also have gas purchases going on.

So you might be asking,

"Miko, why am I tracking it on a spending tracker,

"and also tracking it on my expense tracker

"in my Budget By Paycheck Workbook?"

They serve two different purposes.

You're tracking it on you spending tracker in your wallet

so you always have an updated balance

of how much you have left to spend

in that specific cash envelope category.

Or, for April this is my cashless category.

So I'm just tracking it on a spending tracker.

You're tracking it on your expense tracker,

so when you close out your budget for your tracking period,

you have all of those transactions here,

to count towards closing out your budget.

Plus, not only that, using the cashless method,

I am always updating my balance,

depending on how much I'm spending.

So this gives you an updated balance

of your checking account.

This gives you an updated balance

of how much you have in that specific category to spend.

So the only really big difference that we're making here

is that we're replacing our cash envelope

with these spending trackers.

We still get the same type of awareness,

we still know the instant consequences of our spending

by seeing our ending balance here,

we're just not using physical cash.

Which does have a huge psychological benefit,

when it comes to spending money.

It's just the benefit we're giving up,

to use the cashless method.

But I think more than that psychological benefit,

the awareness is the most important thing

when it comes to spending your money.

And you get that from the cashless method,

as well as the cash envelope method.

So that is a quick rundown and overview

of what the cashless envelope method is all about,

and what it looks like in my real life for April.

If you found this video helpful,

please Like it and don't forget to Subscribe.

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