Personal-finance   |   Stop Overspending: How Cash Envelopes Can Fix Your Budget

Stop Overspending: How Cash Envelopes Can Fix Your Budget

BUDGETING  ADHD RESOURCES  

One of the things I have found helpful trying to budget with ADHD is the use of the cash envelope system for saving and budgeting. For individuals with ADHD, the cash envelope system can be a game-changer. The tangible nature of cash provides a concrete, visual representation of spending, which can be incredibly helpful for those who struggle with abstract concepts of money. The system's inherent structure addresses common ADHD challenges like impulsivity and difficulty with executive function by creating clear, immediate boundaries. Here's how it works and why it's effective:

How Cash Envelopes Work

• Budgeting: You begin by creating a budget, allocating specific amounts of money to various spending categories (e.g., groceries, entertainment, dining out).
• Cash Allocation: Instead of using debit or credit cards, you withdraw the budgeted cash and place it into separate envelopes labeled for each category.
• Spending: You then use only the cash within each envelope for its designated purpose.
• Tracking: When an envelope is empty, you've reached your spending limit for that category.

Here are some ways using cash envelopes can help with saving:

• Increased Awareness: Physically handling cash makes spending feel more real. You're more likely to be conscious of how much you're spending when you see the money leaving your hand.
• Reduced Overspending: The system creates a tangible limit. Once an envelope is empty, you can't spend any more in that category. This helps prevent overspending, which is a common obstacle to saving.
• Improved Budgeting: The cash envelope method forces you to stick to your budget. It provides a clear visual representation of your spending habits, making it easier to identify areas where you can cut back.
• Debt Reduction: By preventing overspending, you're less likely to accumulate credit card debt. This frees up more money for savings or debt repayment.
• Mindful Spending: Using cash can make you think twice before making impulse purchases.
• Visual Representation: Seeing the cash diminish, provides a great visual representation of spending.

I designed this cash envelope budgeting and savings kit for DIY envelopes. Simple print the design, cut, fold and glue to create envelopes for each of your spending categories. The envelope template includes holes sized for standard A5 binders. Hook the envelopes into a binder for easy organization and safe keeping!