Do You Use the Cash Envelope System?

Set your budget. Pull out cash each month. Separate it into envelopes. Spend only cash, according to the set amount allotted to each envelope category.  When it’s gone, it’s gone. Voila, you’ve stayed within your budget. It’s an awesome budgeting strategy. Matt and I love the idea behind the Cash Envelope System. Great as it is, I have to admit, we are cash envelope rebels.


Is it possible to have a well managed household, avoid credit card debt, and stay within your budget even without putting cash into envelopes each month? I’m happy to share that it is very possible. It takes discipline, for sure, but a cash-only policy is not the only way to have a well managed budget.

Let me stop here to say that if you are new to budgeting and a cash envelope system is helping you get and stay on track – you keep at it!  Do what works for you! But if it’s not working for you, or if the idea of pulling out cash, dividing it into envelopes, and paying with cash everywhere you go is preventing you from budgeting wisely – allow me to introduce the lovely Online Envelope Budgeting system from BudgetFocus.

Seeing this online envelope option on the BudgetFocus website is what really pushed me over the edge to love what they offer. They agree that assigning a dollar amount to each spending category each month is the way to go. But they also understand that cash isn’t always a convenient option. Sometimes swiping a card at the grocery store saves time. Paying for gas outside at the pump instead of heading inside to pay with cash is super helpful when you have little ones in the car (or when it’s freezing outside). Shopping online can save both time and money – but you can’t use cash when you do this.

So how can we use the envelope system without cash? Once you have an account set up at BudgetFocus, you simply input your dollar amount into each “Envelope.”  As you spend from each envelope, you transfer that money to keep track of where you are for the month. It is so easy!!

budget focus envelopes

I give a huge thumbs up to BudgetFocus for creating this simple online tool for all of us. This way, we create a workable budget. We set up envelopes. We keep track of spending. We transfer money from one envelope to another as we spend. We stay on track, we don’t overspend, we save time and effort, and we are in control of our money!

Thank you, BudgetFocus, for keeping this process simple and workable for us. Have you signed up for your 14 day free trial yet? I think you will love all BudgetFocus offers as much as I do.

So tell me – do you use a cash envelope system? Does that work for you?


  1. Elizabeth Anne says

    Thank you for this post! I’ve always wanted to try a better budgeting system, like the envelope system, but I never have just because it didn’t seem very practical to use cash everywhere, like you said, and because I pay almost all our bills online. I’ve never heard of BudgetFocus; I’ll definitely be checking them out now! :-)


  2. Lana says

    No cash envelopes here except money for eating out/entertainment. Everything else is entered into a budget ledger. All cash drives me nuts.


  3. Jen says

    We use the envelope system for many categories, but not all but we do try to “name” where every dollar will go, I find if I debit at grocery store I go over budget. If I go there with cash, I cannot go over, but for example gas we debit, because we just set enough aside for what we average in gas. I am not tempted impulse buy at the gas station :) We started the budgeting system one year ago after taking Dave Ramseys financial peace with our church, it changed our lives and marriage for the better!


    Rebecca Reply:

    We do the same thing every since we did the Dave Ramsey program. It has changed our financial lives for sure! No more over spending. We also use debit for gas to make life easier and for automatic bills but everything else is cash. It really helps seeing where your money is physically going and makes me spend less.


  4. Sheila H. says

    I never have cash but also don’t go crazy with my debit card. My husband was the shopper who went over budget and once I took his credit cards and gave him a monthly allotment to spend, our budget quickly became balanced. We cut cable and home phone and agreed to only eat out twice a month, usually at Chick-fil-a and it only costs 25 dollars.


  5. Karen Dee says

    Thank you. I surely need advice! You hit me at a time when I need a system. Hard to get started, especially in the winter. My mind is going in circles! :(


  6. Jenny says

    We use credit cards but pay off the balance in full every month. A few weeks ago our water heater went out…$900 to replace it. We have $1340 worth of cash back money on our credit card so we cashed out $900 and got a free water heater. About 4 years ago we used cash back money to buy a new washer and dryer…completely free since we use a credit card with no annual fee and charge everything we can to it and get between %1-%5 back on everything from groceries, gas, to our basic bills we charge to the credit card every month. The cash back money adds up quickly and comes in handy for emergencies.


  7. Randi Kiefer says

    We tried the cash system and didn’t like it because we had to carry cash around. I found an app for iPhones called GoodBudget. It’s free (there’s a premium one too, but we’ve yet to need that) and you have envelopes on it. Now we can use our debit card, input what we spend on the app and it takes it out of that envelope for us!


  8. Katie says

    We started electronic envelopes years ago by using Mvelopes. It’s a great service! We have since moved to all Mac’s and now use Moneywell. Love it!


  9. Hanneke says

    I love YNAB – you need a budget programme, you can download your transactions from your bank and reconcile it as well as use the budget part of it which is very similar as the ‘virtual’ envelope system. Works well for us :). It’s got an app also.


  10. Amy Peterson says

    I’m curious how this compares with Mvelopes. We tried that and it was way too confusing for me (even with someone helping) I know it’s my brain–probably easy for others, but I had to go back to cash instead. I’m wondering if this would be easier because it doesn’t link to your bank?


    Laura Reply:

    I’d say sign up for a free trial (it only takes seconds to sign up and get started). It really is a very simple system – I love how brainless it is. :)


    Amy Peterson Reply:

    I think so too–I probably need to wait till it’s almost the beginning of the new month since I already got my cash out for the month :) Thanks for the info!


  11. Caroline Cynova says

    I’d love to use a cash envelope system, but my husband does not like the idea. If he had ever experienced what it was like to actually get paid in such a way that he could have a month’s budget worth of money in the bank at a time, every month and not just when he receives a tax return, maybe he would have been willing to try it. But he works loonnng hours for a salary that is insufficient to meet even the basic needs–much less student loan payments! When you write down your house payment (no insurance), one phone, one vehicle (for a couple with 4 children), car insurance, and electricity, and you have about $200/mo left to feed 6 people (and the budget still hasn’t fit in clothing, birthday gifts, furniture, home/vehicle repairs, nothing else)…Well, there just isn’t any cash to put in any envelopes. Most of the bills are auto-pay or online. BUT, all that said, if I were still teaching, and I got a full-time salary paid out monthly, I would DEFINITELY use some sort of envelope system!! And by the way, we plan to begin an aquaponics garden in order to greatly reduce our need for grocery money! :)


    lyss Reply:

    You are not alone…it’s hard when there’s nothing left to save. We are trying to start gardening, too, and I’m feeling overwhelmed with all the work and $ we’re putting into it! If it doesn’t end up saving us $, I’m wasting my time! I’d never heard of aquaponics gardening, so I looked it up. Wow! That looks way too complicated for me! Making a few raised beds is stressing me out enough! lol!


  12. Jenni Moeller says

    We’ve been using cash envelopes for 8 years and it works very well for us. It might not work best for everyone but keep trying until you find what works. It’s worth it to stick to a budget. It truly is a blessing!


  13. Kathryn Guy says

    I am the spender in our marriage, and several years ago we moved to a cash envelope system after a Dave Ramsey course. My husband thought the idea was ridiculous. What difference would it make to spend money on a card or in cash? It’s money spent either way! I was very hesitant to make the change since it seemed so cumbersome and obnoxious. But I can tell you that using the cash system has completely transformed my spending. I no longer go over budget in any category. It’s absolutely true for me that spending cash feels completely different than putting it on a card. I spend less, our budget works out at the end of the month, and we are saving for things we care about. My attitude on money has changed so dramatically after committing to this program. I can’t sing its praises enough!


  14. Kathy says

    I tried the envelope system, but this is the problem I ran into….I had budget categories for food, clothing, household goods….and then I would go to Walmart….and buy stuff that fit into each category….so when I came home, I had to sit down and figure out how much came out of each category….it just got way too tedious for me…I gave up. For a while I just had one big cash envelope where everything came out of it…and when it was gone it was gone…which sort of worked because some months I needed more money for clothing….or more money for food because the pantry was totally empty, etc. But then I started buying more online….or bigger quanties from Azure, so that sort blew the food budget too….so this might be the answer…but it still doesn’t solve my “Wal-mart” purchasing, does it?


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