how to start the cash envelope system

How to start a cash envelope system

Starting a budget when you have failed at saving so many times seems impossible. When I first discovered the cash envelope system my thoughts were, this is challenging. Little did I know the challenge is what I needed. Thinking about the steps it actually sounds pretty simple, you draw out cash and put them into their perspective categories. So why is this budgeting thing so difficult? I believe that even having something explained its still not that simple. If you’re trying any new budgeting technique, first you need to get as much information as you can. Secondly, you have created a goal, and lastly, customize it to your situation.

How I was introduced to the Cash Envelope system

I wanted to share my experience with the cash envelope system. Especially how it helped me control my spending and gave relief to paying my expenses. The cash envelope system is good for people just starting to budget. Sure you have to draw out cash but its the discipline you need to help you get some control. My first introduction to this way of budgeting was after watching Dave Ramsey videos on YouTube.

The intensity and the honest way he approached his storytelling intrigued me. And then I had to know more, my finances were out of control. I had an idea of what a budget was but I’ve always gone over it. Then he spoke of the envelope system. I knew it would be a long way journey with me doing the Baby steps but I still need help with my monthly budgeting. I went ahead and purchased his book, The Total money makeover, and ordered the cash wallet. I was so excited to get it in the mail. And it worked! I put the cash in the envelopes and tracked my spending.

You might need some supplies

At present you can shop all kinds of cash envelope styles and products on Etsy, there is a ton of cute designs. Even if you go to Dave Ramsey‘s home website you can shop for a wallet with built-in envelopes. And also the clip system was introduced as an alternate to the paper envelopes. The methods are still the same. Separate the cash by categories and labeling the clips in your wallet. Through my experience using this system, I wanted to share some tips also to help others get started. Here below are the steps:

Some Cash Envelopes you can shop for now


You can’t separate your categories without doing a budget. Take the time to create your budget for the month. Makes sure the budget you doing is a zero-based budget, meaning every dollar has a home. Be very realistic about how much money you need to allocate in your cash envelopes. There is also an app you can try that reflects this method called Good Budget. It’s just like the cash envelopes rather you are dispersing them electronically. The only difference is that you have really track your spending, so that would take work on your part.


The expenses that are paid Cash versus online are pre-decided in my budget Usually I would schedule out the online payments as soon as I get paid. I prefer it this way so I can draw the rest out in cash. I’m well aware that some stuff you have to pay online. And quite frankly it’s just easier. Some of the things I pay online are my utilities and cable bill. So I either make my payments when I get paid or schedule them out for auto withdrawals.


Label the envelopes with your cash categories Some of them may look like this:

  • Gas
  • Groceries
  • Personal Spending
  • Restaurants
  • Laundry

Fill in the envelopes with your budgeted amounts. My personal decision is to pull out the cash when I get paid because I’m so tempted to spend it If you prefer to draw it out on another day just make sure you don’t spend those expenses on your card. That would defeat the purpose of controlled spending.

Do you need some Cash Envelope Catergory Ideas?

Check out this article of 110 plus Cash Envelope Categories to add in your budget


Every transaction is a deduction in cash, the trick is to only spend what you are allowed. Once that envelope is empty, you can’t dip into another one. Now, this is the hard part. Avoiding the temptation of not grabbing cash from another. Doing a realistic budget and tracking your expense will help you become more accurate when you decide on how much to put in each one. If you have low income, and the cash is thinly dispersed, how to have to practice spending less. Also, you can find ways to save money on purchases with coupons and shopping during sales. If you have a larger purchase to make in one particular category, save the money and hold off until you can add more to it.

At the end of the month, you might have cash still in the envelopes. You can make two decisions either save it for next month so have more money to spend. The second option is that you transfer all of it to your savings. Use this to pay off debt or purchase something you have been saving for a long time. There’s no harm in rewarding yourself after all that hard work. If anything you can use that as a motivation tactic, to cut back every month.

So how long should you keep this up?

Well, that’s up to you. If you feel confident that you can just track your expenses and get the envelope system a rest that is fine. I personally think that this way just takes the thinking out of it. The cash goes in, then out, what’s gone is gone. And if you are happy with your progress and want to continue, then do what is working. At some point, you might get frustrated and sometimes feel defeated, but you have to reflect on the mistakes. Next time try to make a plan for the following month. Don’t beat yourself up if you make a mistake, this is all about learning from them. Start again and celebrate the milestones.

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