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I Saved $7,000 with the Digital Cash Envelope System

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Nope, your eyes do not deceive you. I am not a money blogger. I’m a minimalist and a zero waster, but financial clutter is real y’all. In addition to Kon Maring my possessions and obligations, I’ve been minimizing and streamlining my finances. Like many people, I got bills to pay and I’m in debt. Student loans are my biggest debt burden. I also had an intermittent emergency fund. Meaning, “money come and money go.” The emergency fund would be depleted for immediate needs, but non-emergencies. I have sought advice from multiple gurus and tried many different methods, including the cash envelope system, the budget by paycheck method, and zero based budgeting.

Dave Ramsey-ish?

I adore Dave Ramsey and I follow “most” of his advice, but I’m not a true convert. Dave Ramsey’s baby steps are well known, but if you’re not familiar with them here there are:

BABY STEP 1 Save $1,000 for your starter emergency fund.
BABY STEP 2 Pay off all debt (except the house) using the debt snowball.
BABY STEP 3 Save 3–6 months of expenses in a fully-funded emergency fund.
BABY STEP 4 Invest 15% of your household income in retirement.
BABY STEP 5 Save for your children’s college fund.
BABY STEP 6 Pay off your home early.
BABY STEP 7 Build wealth and give.

Here are the ways we divert from his advice

1 – We still contribute to our retirement accounts. I was a government employee with a pension (a rarity nowadays). My pension payments were mandatory. I could not opt-out. My husband contributes to his 401K and plans to max it out when he can afford to. We are 40ish now with no time to waste and we’re a bit behind on retirement. If we waited to pay off all of our debt before investing in our retirement, we would not have a retirement. When it comes to retirement TIME is your greatest asset.

2 – We have a car payment, which is a big Dave Ramsey “no-no.” We limit ourselves to having one car payment.

3 – We continue to put money in our emergency fund. Dave Ramsey’s first baby step is a $1,000 emergency fund. Once you have $1,000, you put all of your extra funds towards the debt snowball. With the amount of student debt we have, we would be without a full emergency fund for years. We have two young children, a home, and aging parents. We need more than $1,000 in an emergency fund.

4 – I tried the Every Dollar Budgeting App, but it didn’t work for me. Every Dollar is an excellent app, but a plain old Excel sheet works best for me. We get paid once per month, so we use a monthly budget spreadsheet. If you get paid biweekly or weekly, consider the budget by paycheck method covered by The Budget Mom. You can download the budgeting spreadsheet.

4 – I tried the cash envelope system, but I failed every time. I would forget my envelope at home, have the wrong envelope, use my debit card for gas, I would take from one envelope to give to another, forget to write down my expenditures, etc. I consider myself to be an organized person, but I’m also very technologically-focused. If it’s not in my phone, it may not get done. So how do I follow Dave Ramsey without cash envelopes?

I Saved $7,000 with the Digital Cash Envelope System and you can too

I’m not a financial expert, so I took bits and pieces from other financial gurus to find what works for me. Nicole at FrugalChic Life has a video about her 22 bank accounts. Yes, 22! I also watched Jordan Page’s video on the 7 bank accounts you need to have! At that point, I only had a brick and mortar checking and savings account. So I started to wonder, why can’t I do the cash envelope system electronically?

Nicole gave me the idea to create a high yield checking account specifically for my utilities. Every month $650 is deducted from my brick and mortar checking account to my utilities checking account. All of my household utilities and cell phone bill are automatically drafted from this account. Whenever there’s a few extra dollars in the account it rolls over to the next month and I don’t spend it.

I expanded on this and created multiple online checking accounts with Capital One 360, American Express Savings, Chime, and Ally specifically to “tell my money where to go.” We still have our brick and mortar checking account, but we also have separate checking accounts for specific needs. We have budgets for each checking account and when the money’s gone– it’s gone. Just like a cash envelope system. A big pro is that digital “envelopes” or debit cards are easy to use. If they’re lost or stolen, I can cancel my card and request a new one. Listed below is our digital cash envelope system (checking accounts).

Brick and mortar checking (regular bills, pet expenses)
Household (groceries, clothing, gifts)
Utilities (all household utilities)
Expense (gas, eating out, entertainment)
Medical (medical and dental expenses)

Move to High Yield Savings Accounts

My brick and mortar savings account earings is 0.01%, which is next to nothing. I probably earned a few dollars in interest last year. I still have my brick and mortar account, but I moved my emergency fund to a high yield savings account. American Express Savings, Ally, and Capital One 360 all have high yield savings accounts, which are currently between 1.60% to 1.70%. I’m not exactly sure how interest rates are calculated, so I will link to the experts, “How the Federal Reserve impacts savings accounts.” The Federal Reserve is specific to the United States.

Examine Your Spending and Define Categories

I looked through one year’s worth of my bank statements online. Some of you may want to do this old school and print them out. What I found was startling. Every month there was an expense I “knew about,” but I was not prepared for. These yearly expenses should have been easy to track but they weren’t. I found that there were 7 categories that these expenses fit into. Your categories may be different, but mine are the following:

1 – My first category (Camp/School) expenses covered my kid’s book fairs, pictures, camp fees, school lunches, dance classes, and anything school or camp related.

2 – Car expenses include yearly property tax assessments on both of our vehicles and maintenance.

3 – Christmas is the big holiday we celebrate. I was overspending on Christmas. My Christmas expenses went beyond gifts. For example, I paid for my little brother’s plane ticket to visit, our Christmas tree, teacher gifts, and our Christmas dinner. These were all expenses I didn’t realize I had.

4 – An emergency fund is exactly that. This fund is solely for emergencies.

5 – The home maintenance fund is exclusively for household maintenance or needs. For example, I recently purchased a new pantry from my home maintenance fund. We desperately needed storage for our food items.

6 – We had several insurance bills that come due quarterly.

7 – We go on a family vacation with my sister and her kids every year. Every year, I’m always surprised by the vacation bill. Hopefully, not this time.

Sinking Funds

I remember thinking that sinking funds were complicated, but they’re really simple. After examining my spending habits, I created 7 savings accounts for each of the categories. I calculated the yearly total of each category. For example, my camp/school expenses are $400 yearly, so every month I set aside $33. There are some months when there are no camp/school expenses, so the fund builds a bit until it’s used for a large kid expense.

These funds are automatically deducted from our primary brick and mortar checking account when we get paid. Since we don’t see this money, we don’t spend it. $4,000 is a lot of money (itching for me to break into), but when it’s broken into separate accounts, it’s easier to focus on the individual savings goal.

Camp/School expenses $400
Car expenses $500
Christmas $500
Home maintenance $1,000
Insurance $800
Travel $800
Total Sinking Funds $4,000


I opened an investment account with Acorns as part of my emergency fund. Acorns is a brokerage account on your phone. Acorns takes the spare change from everyday purchases (by turning on automatic round-ups) and invests it into the stock market. You can also increase the amount you save depending on your goals. In addition to round-ups, I invested $5/week. I saved about $1,200 with Acorns in one year. Because it’s a brokerage account, it does require personal information. I recently opened a Roth IRA with Acorns as well.

Emergency Fund

I started an emergency fund in a high yield savings account. I saved about $1,800 in my emergency fund this year. I like the idea of a savings account with Acorns, but an emergency fund needs to be completely liquid. When you deduct money from your Acorns account, your stocks have to be sold, which takes time. An emergency fund should be easy to access. My goal is to put more money into my emergency fund. So my totals are as follows:

$1,200 in Acorns account
$1,800 emergency fund
$4,000 in sinking funds
$7,000 TOTAL

So that’s how I accidentally saved $7,000 with the digital cash envelope system. Admittedly, to save $7,000 you have to have some disposable income. I’m not wealthy (at all), but our income was able to accommodate this new savings plan. Whatever amount you’re able to save is a success. These suggestions can be scaled up or down, depending on your particular financial situation. I hope you find a few of these tips to be helpful.

If you have any ideas or suggestions, please share with me in the comments or on Instagram

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