How to use a Cash Envelope Budgeting System

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If you’re new to budgeting and trying to make big changes in your money management, you may have heard of the cash envelope system.

Your first thought is probably, “ugh, what a pain!”

I know. It’s sooo much easier to swipe your card everywhere…but that’s the problem!

When you spend money with a debit or credit card, you lose the emotional connection with money.

You don’t see the actual cash leaving your hand and being exchanged for the thing you bought.

Using cash allows you to see, feel, smell the money leaving your purse!

Free Printable Cash Envelopes

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    You know it’s gone. You know how much you just spent, AND if you don’t have enough, you can’t spend it!

    A cash envelope budgeting system will help you stay on track, prevent overspending, and keep you out of debt!

    Prefer to watch? I’m vlogging our debt free journey over on YouTube!

    Related Post:How to Pay Off Debt Fast

    How to get started using a cash envelope budgeting system

    Make a budget

    The first thing you should do when you start using cash, is to make a budget.

    It’s important to know how much money you have coming in and going out each month.

    Write down your expected income and all of your known expenses for the month (bills, payments, mortgage).

    What do you have left over?

    This is what you have left to categorize and place into your cash envelopes!

    Related Post: How to Make a Budget for Beginners

    Choose your categories

    Now that you know how much cash you have (above your fixed monthly expenses), you are ready to choose categories and make a cash budget.

    You can have a few main categories and lump other things into miscellaneous, or you can be super specific.

    Cash envelope budgeting system
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    I’ve found that we get more specific as we improve our budgeting each month.

    Some common categories that you might want a cash envelope for include:

    • Groceries
    • Restaurants
    • Clothing
    • Entertainment
    • Kids
    • Doctor visits
    • Fun money (personal, his & hers)
    • Has
    • Car repairs
    • Christmas (Save year round to avoid financial stress)
    • Gifts

    Fill up your envelopes

    At the beginning of the month, or maybe twice a month as you get your paycheck, withdraw cash and fill up your envelopes!

    Don’t cheat! If the envelope runs out of cash, you are done.

    Grocery budget short this month? Get creative with your meal plan and see what you can make with what’s in the pantry.

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    Amazing sale going on at your favorite clothing store? If you don’t have the cash in your envelope it will just have to wait until the next one. Yes, there will be another sale!

    If at first you don’t succeed, try again!

    Sticking to a budget and paying cash is not easy.

    The concept is easy, but it’s very difficult to completely change your behavior.

    It’s hard to go from an “I deserve this” mentality to a “I want more for our future” mindset.

    You will only fail if you quit! Instead of giving up, make adjustments, revisit your goals, and just make it work!

    Fill out the form below to access these super cute calculator cash envelopes for free!

    Free Printable Cash Envelopes

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      Frequently asked questions about the Cash Envelope Budgeting System

      What about utility bills, cable, rent or mortgage payments?

      These budget items are usually easier to pay online with a debit card or electronic checking account.

      It’s ok to go ahead and set these up as electronic or online payments.

      The cash envelope budgeting system is best for categories where you are most likely to impulse buy or get out of control with your spending.

      Monthly utilities and mortgage payments are usually a fixed amount that you wouldn’t accidentally overspend on.

      I love to shop online or get my Amazon Prime on…

      Me too!

      Whenever I make online purchases for clothing or from my “fun money” envelope, I take the cash out and set it to the side to be deposited back into the bank account or use to fill next month’s envelopes.

      This way you don’t lose track and get crazy with those online orders!

      Do I need all of those envelope categories?

      No. Do what works for your family!

      In fact, I would start out with just a few categories so you don’t get overwhelmed.

      The first month that we made our envelope categories we had groceries, his & hers fun money, and miscellaneous.

      We are getting more and more specific each month which makes our budget work even better!

      Cash envelope budgeting system
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      Do I need to carry these envelopes around with me everywhere?

      No!  In fact, it’s better to leave them at home until you need them, thus decreasing the temptation for impulse purchases.

      We keep our envelopes in a drawer and grab what we need before heading to the store or shopping.

      Am I going to overdraft my account taking out all of this cash?

      This can be a difficult adjustment at first, especially if you’re starting this budgeting system to get caught up on bills that you have fallen behind on.

      You may want to build up a buffer of $500-$1000 in your account before you start withdrawing your cash so you don’t risk overdraft.

      Another option would be to withdraw cash for your envelopes on a weekly or semi-monthly basis.

      The cash budgeting envelop system takes practice, but it will definitely change the way you manage your money and help you get closer to your goals!

      P.S. Grab the free printable envelopes and more budget printables here!  PLUS get weekly frugal living and finance tips and motivation to pay off debt fast!

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      Leave a Reply

      1. Hi! I just found your blog and find it inspiration to get my but in gear!!! I love the Cash envelope design, can you tell me what font do you use? I’d love to be able to print a new category in your blank template that matches the other pre-printed envelopes. Thanks!!

      2. Post

        Hi Andrea! Thank you! The font is called “grand hotel” and it’s a free font inside, which if you’re not familiar with is a free designing site that I use to design all of my social media graphics, printables, etc. I hope that helps!

      3. So glad I found your site. Since I recently had my third baby, there’s been some major changes to our financial status. Going from a two-to-one income has been a bit stressful and I’ve been searching for ways to try and stretch our finances. Looking forward to trying out the envelope method.

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      5. Hello, I just found your blog and feel it could be helpful for my family and had a question. How do you control your impulse to use your card when out or running an unplanned errand like after work or something?

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        Hi Jerika! Thank you for your question! This is where using cash can be really helpful. In fact, you can leave your card at home if it’s that tempting to you, and only have like $20 on you for miscellaneous spending that way there’s no possible way you could spend more than that! This was really helpful to me in the beginning of our debt free journey.


      hi! I'm shannon

      I’m a wife, mom of three, doctor, and blogger! In 2018, I decided to turn my mom blog, into a personal finance blog so others could follow along on our journey to pay off over HALF a MILLION dollars in student loan and practice start up debt. I hope you enjoy following along, and maybe even find some inspiration along the way.