With COVID-19 pushing things to contactless, is it time for the cash envelope strategy to switch to digital?

If you’re wondering what the cash envelope strategy is, it is simply a way to manage your budget using cash.  You set your budget limit, withdraw the cash from your account, and put it in an envelope to use during a specific period for a specific category.   Some people operate on an all cash budget because they are physically able to see the cash disappear. 

I don’t know about you, but I USED to be a habitual swiper.  I would swipe my debit card without even really thinking about it.  Swipe it here and swipe it there without any thought of my budget. ☹ Now the good thing is (if there is a good thing) it was my flexible debit card.  My flexible debit card was tied to a specific bank account for my everyday flexible purchases such as gas, groceries, eating out, personal care… you get the picture.  BUT I would still somehow go over my grocery and eating out budget.  I was spending at least $125 a week on eating out alone AND had groceries at home. I know, I know….. So, I decided to try to the cash envelope method for groceries and eating out and guess what???  It worked!  I would fill up my envelopes (well here is the coupon holder I used to hold all my cash coupon organizer ) once a month and only spend what was in the envelopes. 

Since COVID-19 has brought everything pretty much to a halt, I’ve resorted back to my flexible debit card and have started creeping past my budget again.  Too, I’m not sure I want to go back to cash as I want to minimize contact as much as possible, at least in the interim.

I’m always looking for ways to help better manage money that is efficient and that WORKS.  So I recently signed up for a digital version of the cash envelope strategy.  It offers the same ability as the cash method, the ability to allocate a certain amount of money for specific categories and the ability to track the spend against those categories, except it is done all within your bank account.  Now this option is not available at every financial institution but there are a few that offer it.  I’ve signed up with Simple Bank as it seems to match closely with the cash method.  I’m still in the process of assessing it so I will let you know how it goes.

Have you tried the cash envelope strategy and are you still using it?