• 01:15:53 am on May 9, 2009 | 5
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    Photo credit: http://www.hot-screensaver.com

    On a Budget? No Problem!

    For a moment I thought this was Jeff’s post … after all, he’s the pilot, right? 😛 But, no, this is Ryan’s post and he chose the image …

    I like Ryan’s ‘electronic envelope system’ for budgeting expenses throughout the month. Would a cash budget be more effective? And, do children see cash any more ‘real’ than plastic, anyway?


    In looking for an image to go along with my post, I googled “budget” and up pops this image. I couldn’t resist.

    After keeping track of everything we spent money on in the month of April, I wasn’t really surprised by anything I found.

    Early on in my mm101 process I took a serious look at spending and we implemented an “envelope system” albeit with electronic envelopes to make things dramatically easier. Money comes into one main account and is then automatically filtered into multiple other accounts, each specific to a class of purchases (i.e. – groceries). So when we are buying groceries we use our “grocery” debit card, and so on.

    We went slightly over on eating out (specifically lunch) but nothing to panic about.

    One seemingly unrelated thing I thought about as a result of this process is how it must be perceived by my kids. What I mean is, they almost never see me or my wife use physical money. They just see us wave our magic plastic card and get whatever we or they want!

    Now we talk to them (we really only talk to my daughter, age 3, because my son is only 1) about how we are able to earn money and how the card actually works. We also are starting to have my daughter earn money by doing small chores, but I’m a little concerned that as they get older they will do like they’ve seen mommy and daddy do and only use a card.

    I’m concerned because, for the same reason a casino uses chips instead of money, there is a mental separation when you use a symbol for money instead of the real deal. Studies have shown that people usually spend significantly more if they use a card instead of laying down cold cash.

    So what do you think? Should we start paying for things in cash? Do you?



  • Scott 9:07 am on May 9, 2009 | #

    Ryan, I like your system of budgeting. We pretty much use the same system, having multiple checking accounts, savings accounts and having everything setup on an automatic wire transfer. The only difference is I take out the cash for the two specific uses I mentioned previously. I do agree that using cash over cards does make you spend less. Using plain cash is much more painful I found.

  • Lee 3:38 pm on May 9, 2009 | #

    Ryan, I use a debit check/debit card and carry very little and most of the time no cash. Of course the bad news for me is I most always have money to do what my impulse drives me to do or at least I have money until I get my bank statement with the overdraft charges on it. 😦

    I’m going to try the envelopes and make it a point of understanding that when the money runs out, it runs out.
    For me paying with cash could actually save me money.

  • Josh 8:57 pm on May 9, 2009 | #

    I over spent on lunch too Ryan, I think it was the spring weather, just wanted to get out and enjoy.

  • Adrian 1:45 am on May 10, 2009 | #

    @ Ryan – Like Scott, savings isn’t your issue so there’s not much value that I can add here. Like the discussion on cards v cash, though …

  • Mark 10:33 pm on May 11, 2009 | #

    @Ryan – I agree that the mental separation of physical cash do lead to more spending. I believe having physical cash to build early spending habits is important. As for your kids, maybe spend cash once in a while in front of them would help.

    I’ve only started using plastic less than 10 years ago and I’m glad my earlier spending habits using cash did help me understand the ‘value’ of money.

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