The cash envelope system is a simple and easy way to manage your money and stick to a budget. Download and print these free printable cash envelopes at home and use the cash envelope template to create as many as you need!
When I was a teenager, my mom introduced me to the cash envelope system. It completely transformed how I looked at money, and is something that as an adult I am so grateful for.
Cash envelope systems are great because they’re super easy and cheap to implement, simple to understand, and something that you can start at any time!
Do you want try out a cash budgeting envelope system (like Dave Ramsey’s), but you don’t know where to get started? I’ve got you with a collection of free printable cash envelopes that you can download and print at home at the end of this article, too! You can use the cash envelope template I’ve included to customize your categories however you need.
Note: Some links may be affiliate links. That means I may make a commission if you use my links to purchase, at no extra added cost to you! I only recommend products that I personally love and believe in. Full disclosure here.
What Is The Cash Envelope System
Essentially, the cash envelope budgeting system is a more old-school way of managing your money. It involves you taking cash out from your paycheck, and then dividing the money up into different envelopes based on categories. For example, an envelope for your rent/mortgage, one for groceries, one for gas and so on.
Every time you go to make a purchase, you take the cash physically out of the corresponding envelope. The concept is that once you are “out of cash” in these envelopes, you have hit your budget limit. If you want or need to spend from a category that’s run out, you either need to choose not to spend the money, or take it out of another envelope’s budget.
The idea is that you budget the cash amount you need for each envelope before you begin spending. When you run out of money, the hope is that you’ve budgeted accordingly and can stop spending. Or, if there’s money left at the end of the month in an envelope, you have so extra funds to save and put towards something else!
The cash envelope system is a simple way to take more control over your spending habits. Have you ever felt like it’s way too easy to overspend when you’re just swiping your credit or debit card? You’re not alone!
The best way to control how much you spend and make sure you stay within your budget each month is to put a specific amount of cash in each envelope each month, and only spend that much.
Why should I use cash envelopes for budgeting?
Budgeting is one of the most powerful tools for managing your finances. However, many people don’t realize they’ve gone over budget in certain areas until it’s already too late when they are primarily using debit and credit cards.
The cash envelope system allows you to know immediately whether or not you are sticking to your budget each month, because you can physically see how much money (cash) you have left!
For many of us, making purchases with debit cards or a credit card is way too easy. Before we know it, we’ve spent more than we had planned, and if you’re already trying to pay down your debt, this can be a huge problem.
When you commit to using physical cash to pay for things, you are setting your brain up for a tangible reminder that you are actually spending money! One of the biggest benefits of the cash envelope budgeting system is that it makes you hesitate and think twice before pulling the trigger.
This small hesitation can actually make a huge difference for many people when it comes to deciding not to make unnecessary purchases after all. Free printable cash envelopes are a great way to get started! Remember to scroll down for your own free cash envelope template.
How to Start Using the Cash Envelope Budget System
Getting started using the cash envelope budgeting system is actually incredibly easy. All it takes is 5 steps!
Step 1: Choose Your Envelope Budget Categories
Before you start using this system, you’ll need to first decide WHAT you’re setting aside cash for. Some of the most common categories that people use include:
Housing (rent/mortgage, utilities, etc.)
Transportation (car payment, gas, maintenance, etc.)
Each of these categories get their own designated envelope. In order for this system to really work, you need to make sure that you have truly accounted for your monthly expense categories. Need some help? Check out this extensive list of budget categories to make sure you’ve got all of the ones you need!
Step 2: Determine The Monthly Budget for Each Category
While some of your monthly expenses might be the same each month, like your mortgage payment or cell phone bill, others might vary.
Sit down and spend some time coming up with a budget for each expense area you’ve chosen to include on the cash envelopes. If you need help, this post walks you through setting up a budget and figuring out expenses.
This step usually requires a little trial and error, especially if this is your first time figuring out a budget for some of these expense categories. Start with an educated guess, and make changes each month if needed.
The most important thing is that the TOTAL amount you budget for all of the envelopes should not be more than the total income you make each month.
Be sure to add up all of the cash envelope budgets. If it’s greater than the amount you make each month, you need to reduce your budget in at least one category, if not all of them.
Ideally, you’ll want your cash envelope expense budgets to be less than your monthly income.
This is key, because any money that you have at the end of the month in each envelope can be put towards meeting your financial goals! Those extra dollars can be put towards paying down debt, saving for an incredible vacation, getting a jump start on setting aside money for holiday gifts, and so much more.
The key thing is that the total amount you budget across all of your envelopes should not exceed the total you get paid each month.
If you add up all the cash envelope totals and it is greater than your monthly pay, you need to reduce your budget in one or more categories until they all equal less than what you’ll bring in.
Ideally, you’ll want to get to a point that your budgeted amounts are well under your monthly income.
Any money you have that doesn’t get put into an envelope can be put towards meeting your other goals, like beefing up your emergency savings or paying down debt.
Step 3: Fill Your Cash Envelopes Each Time You Are Paid
Once you’ve determined that your totals for each budget category work, put that much cash in each envelope. Remember: each different spending category has their own cash budget envelopes.
If you are paid once a month, you’ll pull out the needed cash and put 100% of what you budgeted into each envelope with that paycheck. If you have a bi-weekly pay period, put 50% of what you budgeted into each envelope each time you are paid. If you receive weekly paychecks, you’ll put 25% in each time.
Step 4: Spend Only What is In Each Envelope!
When you need to pay a bill or make a purchase, use the cash in the corresponding envelope. If you don’t know the amount you’ll need in advance, be sure you have space in your wallet for your cash envelopes.
This is the most important part of the cash envelope method: if you don’t have enough money in that particular cash envelope, the preference is that you choose not to make the purchase. If it’s something that is necessary, you can take money out of another envelope.
Keep in mind that pulling money out of another envelope means that you will have less to spend on that category. It’s best to only do this if you truly need to spend the money.
If you don’t have enough money in that cash envelope, you can either choose not to make the spend at all (preferred), or you can take the money from another envelope.
Paying for something online or digitally? Don’t forget to still take the money out of the corresponding envelope as if you were paying in cash! This helps you to make sure you don’t go over budget in that category.
Step 5: Adjust Your Budget Categories and Expenses as Needed
The cash envelope budgeting system can take a little bit of back and forth before you figure out everything for your own budget. Give yourself grace, and be prepared to make tweaks and adjustments as you go!
A good tip is to reevaluate at the end of each month each budget category, and how much you spent. Here are a few reasons why you might choose to change the cash amount in a particular envelope:
- You keep having to pull money from another cash envelope to cover a category because you are spending more than you anticipated
- You have an expense coming up (birthdays, Christmas presents, honeymoon) that you need to allot for
- You realized that you budgeted way too much in a category
- You want to reduce your budget in one or more budget categories to spend less
Remember that it’s easy to add more budget categories by using the free printable cash envelope template at the end of this post! Just print more out =)
Tips For Using Cash Envelopes
The printable cash envelope templates in this post are a great way to get started with cash envelopes. If this is your first time using this system, here are a few of my favorite tips that will help you get the most out this new budgeting process!
The goal of using cash envelopes is to help you take control of your finances.
If this is your first-time using the cash envelope budgeting system, start with just 2-3 cash envelopes for your biggest spending areas (or the areas you know you have a tendency to overspend easily). It can feel overwhelming to keep track of 10 different envelopes if you aren’t used to it.
As you become more comfortable, add in more categories.
Have an Impulse-Buy Category
I will fully admit that I am an Amazon shopping addict, and have absolutely struggled with impulse shopping!
By creating a cash envelope for “fun money” or impulse buys, you can make a huge dent in your spending habits by controlling how much you are actually spending. I have a cash envelope that’s just marked “Amazon,” and each month I put a certain amount of cash in it. Any time I want to make an Amazon purchase, I pull out the cash in the envelope. When it’s gone, I stop shopping!
Keep Track of Online Spending with Cash Envelopes
If you’re like many families, you might do the majority of your shopping online. If you’re wondering how to make the cash envelope budgeting system work when it comes to online purchases, here’s how:
Fill all of your envelopes with cash like you normally would each month. When you make a purchase online (for example, if you purchase groceries), move the cash from your “Groceries” envelope to a separate “Online Shopping” envelope.
Deposit this cash back into your bank account at the end of each month to pay off your credit card bill purchases for the online shopping you did!
Give Your Partner Their Own Envelopes
Unless you’re the only person who is spending money each month, you and your partner or spouse both need the freedom to be able to spend cash when you’re not together.
If your husband never goes grocery shopping, he might not need a cash envelope for groceries. However, the odds are that he does spend money on transportation, grabbing a bite out and picking up household items.
You can use the free printable cash envelope templates to create more envelopes that are tailored to your partner’s needs!
If you’re just starting out with budgeting, be sure to take a look at The Ultimate List of Budget Categories (Free Printable) to learn how to create a budget that actually works for your family.
Free Printable Cash Envelope Template
When deciding on which printable cash envelope templates are right for you and your budget, there are a few things to consider, like:
- Horizontal versus vertical cash envelopes
- If it will fit in your wallet (if that’s important to you)
- Spending tracker on outside, or not
- Reusable envelopes, or not
Grab a set of 7 free cash envelopes in a single PDF below by subscribing to my newsletter! You can use this cash envelope template to print as many as you need. I’ll also send you free printable seasonal cash envelopes too, to say thank you for being part of my list. These are yours to use for personal use.
To use, all you have to do is print the file and cut along the outline of the envelope. To assemble your free printable cash envelopes, fold in flaps (each side and top of envelope) and tape the sides to create the actual envelope pocket.
These can be used as both a vertical envelope or horizontal envelope depending on how you choose to store them.
The Cash Envelope System Can Help You Stick to Your Budget!
If you really want to take control of your money, the cash envelope budgeting system is a fantastic tool. Let me know what you think of the free cash envelope templates, too!
If you need more help with managing your money, check out Beautiful Free Budget Printables and Templates and The Best Way to Keep Track of Bills too. And if you found this article helpful, please take a moment to share it so we can help others on their journey to mastering their budget, too!