How to Make a Cash Envelope Budget to Save You Money

How to Make a Cash Envelope Budget to Save You Money


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I’ve be using a cash envelopes budget system for nearly 10 years now and it has been life changing.

Before using my envelopes, I solely used credit and debit cards. The problem was I always seemed to run out of money and could never keep up on my budget.

The temptation to buy stuff was always lingering and burning big holes in my pocket. I'd buy whatever I wanted, whenever I wanted. Just put it on the card and make the payments. Sound familiar?

When I decided to get serious about paying off debt was when I switched to using envelopes, it has a lot to do with why I was successful and can stick to a budget.


What Are Cash Envelopes?

This is a system for budgeting where you separate money into categories and have an envelope for each category. You fill the envelope with the cash you have set aside for that category. Typically you'd fill your envelopes with cash each time you receive a paycheck.

Printable cash envelopes that are great for sticking to your budget!

What are the Benefits of Using Cash Envelopes?

The best thing about cash envelopes is once the money’s gone, it’s gone!

This requires you to pay attention to what you are buying and make sure it fits inside your budget, ultimately saving you money because it discourages impulse buys.

Another benefit is the ease of transferring money. Need extra money for groceries? No problem, grab a few bucks from an envelope that is flexible, like clothes money, and you’re all set.

Finally, it lets me shop guilt free. I know my food money is for food, so if I want to order a pizza or go out to eat I don’t feel bad about it if I have the money in my envelope. Likewise, if I’ve got cash in my clothes envelope and I see a new blouse I want, I can go ahead and buy it because it is in the budget.

Are There Draw Backs to Using Cash Envelopes?

Cash doesn’t always work for all purchases. Specifically, if you’re shopping online or paying bills that require a check or card. These are just a few examples of when you still need a card, but keep in mind you can always use a debit card. You do not need a credit card.

There might be cases where you could use cash but choose to use a debit card instead. I have little kids and don’t like to leave them unattended while I put gas in my car, so in this case I choose to use my card so I don’t have to leave them while I go inside to pay. Paying at the pump also eliminates unnecessary purchases that might happen if I go into the convenience store.

When Should I Use Cash Instead of a Card?

My rule of thumb for using cash is anytime I need to go into a store I will use cash. This includes grocery stores, department stores, restaurants, hair salons, etc. Even if I’m going to make a big purchase, like electronics or furniture, I will still plan to use cash.

How Do I Make a Cash Envelope System?

1. Choose your envelopes

You can get a box of #10 envelopes at the store, use a printable like this one, or purchase a wallet with envelopes for you to use. I chose to use Dave Ramsey’s Deluxe Envelope System. I feel like the higher quality, the longer the envelopes will last. Your envelopes will eventually ware out and need to be replaced.

2. Choose your categories

Here are some ideas for categories you can use for your envelopes. Decide what works best for your family.

  • Food/Grocery/Eating Out
  • Household Items
  • Clothes
  • Entertainment
  • Haircuts
  • Something you’re saving up for
  • Miscellaneous (guilt free spending money)
3. Set your budget

Decide how much you’d like to budget for each category you choose.

4. Immediately separate and insert your cash every paycheck

It’s important to do this as soon as your paycheck is in your hand or hits your bank account. Cash out what you need and put it in your envelopes right away. This way it doesn’t get spent sitting in your bank account.

If you get cash and don’t sort it out right away, you can also run into the problem of starting to spend it and lose track of it, so separate it immediately.

5. To track or not to track

Usually envelopes for budgeting have an area where you can write down your transactions.

I find it easy enough to peak inside the envelope and know how much I have left, so I never write down the transactions.

You may find it helps keep you accountable to track your spending. If you need to get used to using cash, write down what you are buying so that you know you’re not being wasteful with your money.

It’s up to you, do what you like best!

How Does Using Cash Help Me Save Money?

Personally, I find that I can keep myself under budget by using cash. I’m very mindful of what I’m spending on and love it when I have a little leftover when the next paycheck hits.

If you have money left over, you can roll it over and have a bigger budget for next time, or you can use the money you saved to go toward something else you are saving for. Move it to another envelope or put it in the bank!


Cameron is a Financial Coach who works with couples and individuals to achieve financial freedom and peace of mind. She believes being in control of money = less stress + more fun! Join her on the journey to think about money less and enjoy life more.