Forget Cash Envelopes. Use Your Bank Accounts to Budget.

I hate to carry cash. I don’t know why exactly. Maybe because trying to dig the exact amount of cash I need out of my wallet seems inefficient in the world of the debit card. So, when I started trying to find an easy way to budget my money and someone suggested that I use the cash envelope system, I cringed and immediately shot the idea down. Young woman makes purchases on tablet at coffee shop

Going to an ATM weekly, separating cash into envelopes, carrying those envelopes around in my purse, and having to count out cash for each purchase was just not something I was going to do long-term. I know myself well enough to know that.

Eventually though, someone suggested I apply this “envelope system” loosely to the way I used my bank accounts, and wouldn’t you know…it actually worked. I simply used my bank accounts to create a very useful, non-restrictive way to budget.

Here’s how I structured my accounts to help me quit overspending and actually save more money…

  1. I created a “Bill” account. I opened a UB Fundamentals account. It’s just a basic, no-frills checking account. I have my paycheck deposited here. I also have all of my bills draft out of this account. And since it only ever contains enough money to cover my bills, I avoid dipping into this account because I know this money is committed and put me in a serious bind if I spent it.
  1. I created a “Spending” account. My second account was a Kasasa Cash Back checking account. Since I use this account for debit purchases more frequently, then it helps me meet my qualifications for earning my cash back rewards each month.

    This account functions as the name suggests. All of my spending money is held here. When I get paid, I figure out how much I need to cover all of my bills for the next month, then I figure out what half of those bills is (since I’m paid biweekly) and I leave that amount in my Bills account. Anything I have left that I don’t need for bills gets moved from my bill account (where my paycheck is deposited) into my spending account. I categorize spending as groceries, gas, eating out, new clothes, etc. Basically, anything that I could cut back on or do without if I needed to tighten my belt a bit.
  1. I renamed my accounts. You can rename your accounts within your online banking (which also changes it in the UB Mobile App) to reflect what each account is specifically designated to be used for. When I login, it shows each of my accounts, but instead of having the boring old “Cash Back account” or “Fundamentals”, it shows “Bill Account” and “Spending Account”. This has helped me tremendously because it allows me to quickly see a snapshot of how much I have for my bills and my spending. It’s instant feedback on how I’m doing and whether I need to curb my coffee shop visits for the week.
  1. I did the same for savings goals. I created an Emergency savings account and a Travel savings account, then I set up an auto-transfer to occur on the days that I get paid to automatically move over how much I wanted to contribute toward each of those goals from each paycheck. 

Creating this type of structure allowed me to get a really clear picture of how much money I had to spend versus what was already committed for bills. Plus, seeing a lower balance in my spending account had a huge impact on how easy it was for me to spend frivolously.

If you like the idea of separating your money without carrying around envelopes full of cash, try this! Hopefully it works for you, too.

For more information on United Bank Kasasa checking accounts and the qualifications required to earn rewards, visit our personal checking pages.