How To Use a Cash Envelope System for Budgeting

Using cash for budgeting is one of the most effective ways to keep yourself in check and not overspend. Find out how to organize your cash and use a cash envelope system to keep yourself and your family on budget.

One hundred dollar bills in an envelope.

One of the biggest changes I made to my life in the past few months was changing to a cash system.  We use envelopes to store our cash and we shop with cash only.  Whatever amount of money a week I have budgeted in, I get out and use it to make all my budgeted purchases.

If you have cash you can never spend more then you have.  This helps with impulse buys and it also helps you to get better deals on things.  With cash there are no processing fee and other type things that drive the price up on the item.  When you have cash people are willing to give you a percentage off or something like that because they wont have to pay for those fees and such.

A person holding a cash envelope full of cash.

This also helps you to do your homework.  It is pretty embarrassing to be in line at a store and have you items ring up to be more then you have.  Then you have to ask the cashier to take am item out of your cart and take it off.  You then repeat that over and over until you get to the amount you have.  This causes the cashier to get frustrated, you to get frustrated, and the people in line to get frustrated.  If you had done your homework and added as you shopped then you wouldn’t be in that position.  So to avoid thing like this you plan and you make sure you are sticking to your money.

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Sounds like a lot of work right??  Well, it isn’t as much work as it sounds like.  You are just more careful with cash.  You think things through more.  You are aware of your money and where it is going and how you are living.  You think more about everything, your budgeted amount, if the money would be better off in another category, or if you really want to spend the money.  So it helps you to save by not spending frivolously!

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  1. I was just thinking about doing this system effective July 1, 2009. I have been doing couponing since the middle of March and have somewhat of a stockpile. I think I'm going to try a $200.00 per month budget for groceries effective July 1, 2009. I want to put the cash somewhere and just work on that amount. I hope we can make it happen! I'm glad others want to do this and I agree, it makes you think your purchases through more thoroughly instead of thinking "well, I have my debit card, I can just pay w/that!" Any cash leftover goes into savings and/or saved for the next month to buy bigger purchases such as meat, etc. I love your site Melissa, I really enjoy reading it each day. Unlike other sites that are a train wreck, this one is nice and calm, easy reading and very informative!! Keep up the good work!!

  2. Good luck! let me know how you do. I love hearing how it all works out for people. Thank you so much for the nice compliments. I am so glad others find the site so helpful! And I love to hear about it as well!