The classic cash envelope system has recently gone viral with a new term called cash stuffing method. Where your budget by utilizing cash and organize your spending categories within individual envelopes. This system has a rock-solid track record of helping young people learn how to manage their spending, avoid debt, and bank fees. But as times are changing, with the rise of digital currency, online shopping, and credit card hacking. Do you start to wonder if the cash envelope system is dead? I know this might be a controversial topic, but let’s talk about it.
The New Era of Digital Currency
It is not well known that in March of 2022, President Biden signed an executive order to ensure the responsible development of digital assets. A big part of that order includes pushing for more money and research in the exploration of a new U.S. Central Bank Digital Currency (CBDC).
What does this mean for you? Potentially the death of physical cash and a change in how we view money in the future. For many, this transition won’t be too harsh if you already use debit and credit cards, and are familiar with Zelle and Cash App. But for those who strictly use physical cash or use cash envelopes, it could be a more difficult transition. Even though this is something that will take time to change, it’s important to not wait until it’s too late to start slowly transitioning away from cash.
Digital Envelope System
With online shopping becoming the norm, the use of cash is becoming more irrelevant by the second. Nowadays, you can buy movie tickets, groceries, clothes, and everyday household essentials right from your phone. This is shifting how we spend and save money. It’s vital that we find ways to adjust to it and not against it. By using a digital envelope system, you can benefit from everything that you love about using cash. But the million-dollar question is how do you create a simple digital envelope system for your finances?
There are a few answers here, you can use a budgeting app that focuses on organizing and tracking your spending just like cash stuffing. Here are a few of the top budgeting apps to consider:
Transition Digitally with the High-5 Banking Method
Another great way to slowly move away from cash into a digital format is with the High-5 Banking Method. The High-5 Banking Method is a way to organize your budget and goals with a purpose through the use of multiple bank accounts. Instead of using multiple cash envelopes, you can utilize the specific bank accounts within the High-5 Banking Method. Where your first checking account will house the funds for your bills. This is where you’ll place the funds for your necessities like your groceries and gas. While the second checking account is designated for lifestyle expenses only. This is where you’ll place the funds for entertainment, Starbucks, clothes, eating out, and household items. The great thing about the High-5 Banking Method is that you can still use cash while gaining the discipline needed before going all digital.
Now I do want to clarify that I am a big fan of using cash stuffing as a way to learn how to manage your money. But as times are changing, I think it’s important to be aware of the technical evolutions that will directly impact your finances. This includes the uproar of digital currency, digital budget, and better banking. All of these changes are coming and I personally rather start preparing now than be caught off guard in the future. This doesn’t mean the cash envelope system is dead, but it’s important to know this method will soon need to be fully digital.