Matt Jabs at debtfreeadventure.com wrote and interesting post about spending journals.
I love that he is trying to reign in discretionary spending, however I believe that the cash envelope system is a far better way to do that.
A spending journal is reactive. Cash envelopes are proactive.
With cash envelopes I don’t have to record every purchase and I get to allocate my money when I am doing my budget each month. It’s the difference between making a grocery list and eating before you go to the grocery store Vs going to the grocery store when you are hungry without a list.
Since I know the purpose of each envelope I don’t care where I spent the money so long as I don’t spend the grocery money on beer. However, beer can be bought from the miscellaneous, restaurant or entertainment envelopes.
I like both ideas. I like the idea of a spending journal when you’re first trying to get an idea of how much you’re spending – especially before you create your first budget and cash flow plan. Once you’ve established a plan, set up an envelope system, and continue tracking what you’re spending, if you had money left over in certain envelopes, adjust.
So I think both can be valuable tools!
Thanks for commenting; you’re right they can both be valuable tools.
There is this awesome Personal Finance coach out there named Matt Kelly. He sent me a cash envelope system recently and I am going to implement it into our lives.
My wife and I have already figured out that we need 5 envelopes, and we know how much we need in each envelope. So starting Nov. 1st, we are going to start using them.
That said, we will both keep a spending journal for the rest of our lives. Why? What better way to track every penny you spend? There is none. Period.
We will use the cash envelopes in tandem with the spending journals by adjusting the amounts that go into each envelope based on what we spend.
Awesomeness!
Thanks Matt, can’t wait to here how it works for you!
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