Question

I'm brand new to budgeting and my husband hasn't done it in years. I'm fascinated by the budget by paycheck method, but my husband brought up an question that I didn't know how to answer. I mentioned the cash envelope method and he thinks that a person would actually lose money with this method because the more money you have sitting in the bank, the more money you make with interest; rather than pulling out a bunch to stuff envelopes. I guess that would be true, but I'm a visual person, so having only a certain amount of money to spend helps me keep myself in check; rather than keeping up with it online. Does anybody have any opinions on this issue? We don't have any debt, so we're just starting to budget to prepare for my husband's retirement.  

Answer 1

Maybe depending on what bank you have but our Checking account doesn’t earn any interest on money that’s in the bank

Answer 2

I’m still trying to figure out the best way to manage but for now I keep all of our savings/sinking funds in accounts for that purpose. I also have a separate account for groceries. The only cash I pull out is the cash I plan on spending which is my hubby’s spending portion and my own spending portion which I split into categories (gas, eat out, misc, fun).  

Answer 3

Not really sure this is a valid point anymore. Interest rates are next to nil now, you might earn a whole dollar for the entire year.