Cash Envelopes

Why I Decided to Use the Cash Envelope System

When I first started getting my finances under control I didn’t stick to a specific budget. I cut back drastically on my spending during my no-spend year challenge and through that was able to throw a ton of money towards my debt without tracking pennies. 

Eventually I developed a loose budget. That budget involved using my credit card and I was never quite able to keep track of how much I was spending in categories like eating out and groceries. I was fine with that at the time because I was able to pay off my credit card on time every month. Being in a position of privilege by having a reasonable salary and cheap rent made this possible. 

At some point, I did realize that there would be value in me figuring out a system that would allow me to know for sure that I was staying within the budget categories that I had designed for myself.

I tried different methods like tracking what I spent in a notebook and then in an excel spreadsheet but no method stuck. It wasn’t until I started the cash envelope system that I was able to finally make sure that I wasn’t going over budget each month.

I am so glad that I found this system because my partner and I are now living off of one salary requiring us to stick very strictly to our budget to make sure we aren’t at risk of digging in to our savings.

Why do cash envelopes work for me? 

1.     Every time I make a purchase I can look in to the envelopes and see how much money will be left once I make that purchase. Seeing the total in front of my face makes me second guess whether I want to spend that money because I am faced with the reality of what will be left after that purchase.

3.     Once the cash is gone, it is gone. This is a physical thing that shows me when I have to stop spending vs trying to figure out when I need to stop swiping my card by doing a bunch of math. The wallet does the work for me. 

4.     My wallet with the cash envelopes is super cute. Sometimes having a cute system can be motivating, at least to me, encouraging me to use my system. 

 What categories do I use the envelopes for?

1.     Groceries

2.     Medical Expenses (co-pays for doctor’s visits and medicine)

3.     All extra spending: this includes eating out and buying any “things”

 I do occasional buy things online (I have some vitamins that I have only found on Amazon). I have a system for how I reconcile this which I will detail in another post.


 Have you used the cash envelope system and have you found it helpful? Let me know, I would love to hear about it. 


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