Cash Envelope Budgeting In 4 Easy Steps [Free Printable] (2024)

Cash Envelopes Are (Still) The Best Budget System

In today’s card-swiping culture, it’s easy to lose track of where exactly your hard-earned money is going every month. Believe me, I know from personal experience! Budgeting and keeping track of money have never been my strong suits.

So every once in a while, I have to make a concerted effort to get my spending and budgeting back on track. And when I do, there’s one system I always go back to—both because it’s simple and because it just plain works!

Related: 11 Practical Ways To Save Money When Times Are Tough

The budgeting system I want to share with you today is not new—not by any means! You might know about it because of Dave Ramsey and his Total Money Makeover plan, but people have been using “envelope budgeting” to keep track of their money since the days of the Great Depression.

This system still works just as well now as it did back then, and today we’ll explore how this low-tech cash envelope system can help you regain control over your financial state quickly and easily! :-)

How To Use The Envelope Budget System In 4 Easy Steps

1. Determine Your Fixed And Flexible Spending

The words “budget” and “budgeting” are both kind of a bummer to hear, but outlining a budget is the first step toward figuring out your finances! Start by making a list of your fixed monthly expenditures, like your rent/mortgage, car payments, loan payments, utility bills, etc.

Since those expenses are fixed, you won’t be factoring them into your envelope system. Those can come out of your checking account every month on auto-pay, or however you prefer to pay for them.

Everything that isn’t fixed is considered flexible spending, and using the envelope system, you’ll be paying for those purchases in cash. (It “hurts” more to fork over cash than it does to swipe your debit card, so dealing with cash can make it easier to stick to your budget!)

2. Figure Out Your Budget For Flexible Spending

Once you know how much you spend on fixed expenses every month, you can start figuring out your budget for your cash envelope system. Subtract your monthly fixed expenses from your total monthly income. And if you save a certain amount of money each month (which everyone should), subtract that amount from your income as well.

• Total monthly income – Fixed expenses – Monthly savings = Cash for your envelopes!

3. Label And Fund Your Envelopes

Now that you know how much cash you have to work with, you’ll want to determine how much of it you’ll set aside for each spending category. These cash envelope ideas can help you come up with your own useful categories:

• Food
• Gasoline
• Clothing
• Entertainment
• Hobbies
• Beauty
• Transportation
• Medical
• Gifts

Write the name of each category on a separate envelope, then set a reasonable spending limit for each category based on your budget or financial goals. Finally, fill each envelope with the money allotted. (For example, if you set a $100 spending limit for clothing, put $100 in cash in your clothing envelope for the month.)

4. Go Forth And Spend (Within Reason!)

Go about your routine and use the money from the appropriate envelopes to cover your cash purchases. And once you’ve spent all the money in a given envelope, you’re done spending for the month! (You can “borrow” money from another envelope/category if there’s some leftover, but no extra trips to the ATM!)

And it might take a few months to really get the hang of your envelope budget system. Be patient with yourself, and don’t give up! You’ll fine tune it in time, and the results will be SO worth it! :-)

Download The Cash Envelope Printable

Have you tried the envelope system, or any other method of budgeting? Which one is your favorite?