Use the Cash Envelope System & Find Success

Inside: Learn everything on how to start a cash envelope system. This envelope method of budgeting is simple to manage money. Use the helpful cash envelope categories list.

The cash envelope system can be a game changer for anyone struggling with money.

It is the best way to only spend what you can actually afford. IN CASH!

For many people, they can’t imagine ever spending money any other way than using the cash envelope system.

While it is a game changer, you must learn how to use the cash envelope system correctly. If not, you are in the same game as before. It won’t be able to work properly and you won’t see the greatest benefits of using cash.

Moving over to a cash envelope system is the simplest tool to start budgeting. Over time, it will help you to stop living paycheck to paycheck and start saving more money.

Don’t worry… we are going to cover how do you start the cash envelope system. It will be explained in detail throughout this post.

Like the idea, but don’t use cash? Learn how to do this with the cashless envelope system as well.

What is the Cash Envelope System?

Let’s explain this method of using cash envelopes for budgeting.

The method of cash has been around for a really long time (remember credit cards, debit cards, and even checks are relatively a new concept). It is how money has been handled for thousands of years.

It is the most basic, simplest, and rudimentary way of managing money.

Because of how the online world of managing money, it is harder for us to grasp using the cash envelope method. There are so many questions on how to budget with cash in our digital society.

The bottom line… It is possible to budget using cash envelopes. In addition, it helps with breaking many bad spending habits, overcoming debt, and starting your path to financial freedom.

Even if you don’t use a money management system binder, I highly recommend having all of your bills, budget, and notes in one place. Learn how to organize your personal finances.

However, the cash envelope method has been made famous by Dave Ramsey. He has helped many people overcome their debt and start living below their means. For that, he gets a high five!

Why Does the Cash Envelope System Work?

The cash envelope system is a great way to jump into budgeting for the first time. You get to see how and where you are physically spending your money. Online transactions are harder to track and more difficult to feel the pain of spending money.

The main goal (regardless of how you manage money) is to spend less than you bring in. That is the primary advantage of using cash envelopes.

Other benefits of the cash envelope method include:

• Actually see in real cash your spending habits.
• Difficult to overspend.
• Provides discipline.
• Accountability system.
• Keeps you on track.

By using this type of system, you can reach your money goals faster and see real progress sooner.

You don’t need anything fancy to start. It doesn’t take money upfront to begin. You can start right now.

Cash Envelope System Categories

These are the main cash envelope categories that you need to use cash for:

• Groceries
• Eating Out
• Clothing
• Gas
• Gifts 
• Entertainment
• Haircuts / Beauty / Personal Care
• Pocket Money or Slush Money

Obviously, this is a completely personal preference. Some people use way more cash envelopes. Others a few minimal categories. The choice is thoroughly yours. And you will probably adapt your categories over time.

The key is to label your cash envelopes appropriately.

Find a full list of personal budget categories.

How does the Cash Envelope System Works?

When using cash envelopes, the process you follow is similar to learning how to budget money. The main difference is you are actively putting cash into envelopes to start rather than categorization your transactions at a later date.

The envelope system really does work!

1. Make A Budget

The first step of budgeting is to make a budget.

You need to decide in advance how you plan to spend the money coming in.

The key to being successful is to budget in the same period that you get paid. If you are paid bi-weekly, then you budget bi-weekly. If you are paid monthly, then budget monthly. Budget monthly or budget each paycheck if you are paid twice a month.

That just helps to make the whole system easier to understand, which in turn will help you be successful.

2. Leave Money for Fixed Expenses

Not everything today can be paid for using cash. Many of these transactions are done online. 

For any fixed expenses that are reoccurring and the same amount each month, then leave the money in your bank account. There is no need to pull those fixed expenses out and put them in cash envelopes. Some examples include mortgages, insurance, utility bills, etc.

To make sure bills are always paid on time, download our free bill payment organizer to keep you on track.

Know someone else that needs this, too? Then, please share!!