Cash Envelope System For Beginners

Looking for a cash envelope system for beginners?

The cash envelope system is a great budgeting method that you can use to take control of your money!

If you don’t know what the cash envelope system is don’t worry, we’ll dig deeper into it soon.

You will see how the cash envelope system can save you $100’s to $1,000’s!

To be honest with you… I am horrible at budgeting! I mean, I know how to do it and how beneficial it is but I’m not very fond of it.

Budgeting can be a really painful and boring task but the cash envelope system is a game-changer!

This method helped me so much with my budgeting and I hope it can help you too.

Let’s dig deeper into the cash envelope system for beginners…

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    What Is The Cash Envelope System?

    What Is The Cash Envelope System?

    A cash envelope system is a budgeting method where you put a set amount of cash into envelopes for different types of spending you do.

    For example, you can have an envelope for eating out and then put $50 in it for the week. Once you spend that $50 on eating out, that’s it!

    The whole premise of the system is to feel the pain of seeing cash leaving your hands.

    In fact, it has been proven psychologically, that it hurts more to spend cash than it is to spend with a debit or credit card.

    With credit cards, Apply Pay, or mobile apps, there’s no pain involved. In fact, it’s way too easy, you can just swipe, tap, or use your fingerprint ID to keep charging away.

    So, with cash, you are more aware of how much you are spending and what you are spending the most of your money on.

    With a cash envelope system for beginners, you will learn how to budget easily!

    I recently implemented the cash envelope system and I am already starting to see results. It’s also a lot of fun!

    Being on a limited budget and a cash one forces you to get creative. And who wouldn’t love being creative all the time?

    However, one thing to note if you choose to use the cash envelope system is that you will no longer earn cash back or other rewards when using a credit card or debit card.

    I am a big user of cashback apps like Dosh, Rakuten, and Ibotta but by using cash these apps will no longer work.

    But… with the cash envelope system, you will most likely save more money than you are getting in cashback so it turns out to be better.

    Some people rather use jars instead of envelopes which work the same but I rather envelopes since they are easier to carry around.

    The downsides to the cash envelope system are that you will always need cash on hand, so you better hit up the bank and since you are using physical cash you have to be careful not to lose your money.

    The cash envelope system is really simple, all you need is cash and envelopes, and that’s pretty much it!

    How To Start A Cash Envelope System For Beginners

    How To Start A Cash Envelope System For Beginners

    Now that you know what the cash envelope system is, how do you start it?

    Well… it’s pretty easy!

    All you need is cash which you can withdraw from the bank and have some envelopes and that’s it!

    You will then label the envelopes with different categories of spending and then decide how much money you are willing to spend in each category and load up your envelopes.

    The envelopes can be filled with a weekly budget or a monthly budget. I recommend a weekly budget so you don’t have so much cash at one time laying around.

    If you struggle with debt I recommend using cash instead of credit cards to manage your money.

    The cash envelope system kicks it old school and goes back to basics by just using cash and feeling the pain when you are spending your money.

    It’s a really simple system to implement so definitely consider it if you are looking for a cash envelope system for beginners.

    Let’s dig deeper into this…

    Creating a Budget For the Cash Envelope System

    Creating a Budget For the Cash Envelope System

    The best way to determine a budget for your cash envelope system is to look at your spending for the last few months and see what are you spending on.

    Then list all the spending that was on needs (i.e. internet bills, car insurance, etc.) and list them.

    After you focus on your needs, then list out all the things you spent on that are classified as wants or miscellaneous spending.

    For example, you can separate monthly bills from regular spending and wants.

    Filling Your Envelopes

    Filling Your Envelopes

    Now that you have your budget and the categories for your envelopes it’s time to get some cash into them.

    If you’re paid bi-weekly, you’ll be making two withdrawals a month. You’ll add up your cash items in your budget and that’s the monthly amount.

    For example, this can be $500. You can withdraw $300 on the first pay of the month and $200 on the last pay. Then, stuff the envelopes according to what you budgeted.

    Digital And Cash Budget

    Digital And Cash Budget

    The key to a successful budget is figuring out what works for your specific needs.

    What if your bills are auto-billed to your credit card? Do you have to switch those to cash?

    The simple answer: No!

    Because those are fixed expenses and rarely change, it’s okay to keep those bills on your credit cards.

    Items such as Internet, Car Insurance, and Mobile Phones usually are billed to cards.

    The idea is to stop your discretionary spending (shopping, entertainment, eating out) from going on your cards, that’s what causes the most damage.

    Just remember to set aside money to pay your card each month to cover your monthly bills.

    If you believe that even having your monthly bills on your credit cards will test your discipline, then pay from your account or use debit. You have to practice extreme discipline to stick with your budget.

    What About Online Purchases?

    What About Online Purchases?

    Ah yes, nothing like online orders to throw a kink in the cash only system.

    I would highly recommend avoiding this altogether but some household items are cheaper when purchased online.

    Again, practice extreme discipline!

    Let’s do an example:

    If you have $50 in your household budget envelope and you purchase filters for your water pitcher online for $44, whether you pay with your debit card or credit card, you must take $44 from the household envelope and deposit it back into your bank account.

    Then enter this transaction in your spending tracker.

    Make sure to pay your credit card the $44 from your bank account if you paid that way.

    It can be annoying to do this but don’t let this deter you from the cash envelope system!

    Creating The Envelopes

    Creating The Envelopes

    Once you’ve figured out your budget and created your categories for your envelopes, it’s time to put together your cash system envelopes.

    As I mentioned before you can use plain envelopes and just write on them but you have to make sure that the envelopes are the right size to hold your cash.

    The bill size is different depending on the currency you use so just make sure you are using the right envelope size for your currency.

    You can then design the envelopes to your liking to make it a fun project which I recommend doing.

    Many people find it to be more motivating to use if it was cheerful.

    Yes, you can purchase pre-made cash envelopes on sites like Etsy but when you put the work in to create your own envelopes it will make you feel more connected to your budget.

    Design your cash envelopes to your liking and just have fun with them! It’s also a fun project you can do with your kids if you have any.

    Also, it’s a great idea to have a bag to store all your envelopes in before you lose them!

    How To DIY Your Own Envelopes

    If you don’t want to buy and use blank envelopes, you can actually make your own.
    Let’s check this out…

    Firstly, you will need certain materials to use when creating your envelopes. You can see the materials list below:

    Total Time Needed: 20 Minutes

    Total Cost: 20 USD

    Materials Needed

    • Paper, either regular or 12X12 cardstock paper
    • Scissors
    • Pen/pencil
    • Ruler
    • Double-sided tape or regular tape
    • Labels

    Create A Template

    Create A Envelope Template

    The first step you should do is create a template for your cash envelopes so all your envelopes have a similar theme.

    You can create your own template or you can get some online for free, print them out and test them out to see if you like them.

    After you print the template and cut it out you need to trace it onto heavier paper to create a mock-up or template.

    It’s up to you if you want to do this. I wanted a heavier template that I could trace multiple times without it getting distorted.

    Once you’ve determined that your template will work, trace it onto the back (white side) of your pretty scrapbook paper.

    Cut Them Out

    Once you’ve traced your template onto all your sheets of cardstock, cut them all out.

    At this point, you may also want to trace or draw with a ruler your folding lines onto the white side of the paper.

    This makes it easier to remember where to fold in Step Three.

    Note: You’ll only be able to get one envelope out of each 12X12 piece of cardstock. When creating your cash envelopes, don’t forget to add a personal touch with a unique card design. You can place the card design on the front side of each envelope to make them more appealing and easily distinguishable.

    Get To Folding

    With the white side of the paper up, use the edge of a ruler to help create the folds in your envelopes.

    Double-check your alignment by folding the envelope up but don’t tape at this point!

    The trick is to see if any paper doesn’t line up. If it doesn’t either re-fold or trim off some paper with scissors.


    Now that you’ve created the folds, it’s time to assemble. If you’re using double-sided tape, put a strip of tape down each side seam and seal together.

    You may need to place something heavy like a book on top to get it to stay.

    I found that the double-sided tape wasn’t strong enough to hold cardstock and had to tape them as well. Regular scotch tape or washi tape will work.

    Take your pick! Don’t forget to create labels! I used a sheet of cardstock and printed them off on my printer.

    And, that’s it!

    Congrats! You’re finished! Time to enjoy your new cash envelope system!


    Here are some frequently asked questions about the cash envelope system for beginners…

    Does The Cash Envelope System Work?

    Yes, the cash envelope system works by limiting your spending and using the psychological principle on the Pain Of Paying.

    How Does The Cash Envelope System Work?

    The cash envelope system works by forcing you to budget your spending using cash. This way you are limited to the cash you have in the envelope not digits in a bank account or credit limit.

    What Are Cash Envelopes Used For?

    Cash envelopes are used to hold cash for different categories of spending such as bills, food, rent, etc… It’s a budgeting method that will help you control your spending.

    What Can I Do With Leftover Cash From Cash Envelopes?

    What to do with leftover cash from cash envelopes depends entirely on your financial situation. You can put it towards your emergency fund or savings, pay off debt, or treat yourself to something.

    How Many Cash Envelopes Do I Need?

    The number of cash envelopes you need depends on your spending habits. The basic categories are rent/mortgage, food, and bills but there are others you might have that other people don’t. So, track your spending and do your best to categorize each type of expense to use with a cash envelope.


    Is the cash envelope system for everyone? No, it’s not a perfect system and it doesn’t fit everyone’s lifestyle but it’s a great way to budget if you are struggling.

    Going cash only is the only way to learn to stick to a budget. When you ditch credit cards, you can’t go over budget.

    There’s no way for you to spend more than you make. When the money in the envelopes is gone, that’s it, you can’t buy anything else.

    This is why the cash envelope system works so well!

    Cash is harder to spend and it runs out so when you run out of cash then you’re out. No more swiping your card

    If you want to start a successful cash envelope system here are some key points:

    • Go cash-only and ditch the cards
    • Understand your money strengths and weaknesses
    • Create a budget
    • Track your spending, debt repayment, and goals

    By doing this you will achieve financial freedom, have less stress, get rid of painful financial anxiety, and live a much simpler life.

    If you liked this post then I recommend checking out my posts on How To Budget Money On Low Income (11 Best Ways) and Tired Of Being Poor? Here’s What To Do.

    What do you think about this cash envelope system for beginners? Have you tried this before? Let me know in the comments below!

    Are you ready to take control of your money? Check out these awesome money resources which will help you to make and save $1,000’s!

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