5 Smart Ways To Use Cash Envelopes Like A Pro

Want to know what are cash envelopes? And how does the money envelope work? Well, you are in the right place if you want to learn more about cash stuffing.

Stretching every hard earned dollar you bring home can be hard. And if you are anything like me, you are probably doing all the research you possible can so you can make sure you get to keep most of your money.

As someone who loves to save money, I’m giving you the top cash envelopes tips my family and I swear by.

You are going to learn all about money organization, cash stuffing, the best cash envelope system, and more. The cash envelope system will transform the way you handle your money and you’ll become a better budgeter and a saver too.

This post is all about the Cash Envelope System.

What are cash envelopes?

It’s a smart way of handling your money so you can keep track of it better.

When you use cash instead of swiping a card, you are more aware of your purchase and you are more likely to stick to your budget.

You also become more intentional with your purchases and you’ll think twice before making a purchase.

Cash envelopes help you physically divide your money into different spending categories. (Instead of leaving the money sitting in your checking account.)

To use cash envelopes, you would withdraw the budgeted amount and use physical cash for every day purchases.

This is called your variable spending. Because it changes every day, it’s not like a fixed bill that stays the same every month.

Cash envelopes are typically used for areas in your budget where you tend to overspend like on eating out, shopping, groceries, etc.

Using cash envelopes will give your budget some boundaries.

{CHECK OUT: How To Stick To A Budget in 3 Easy Steps?}

So what are some cash envelopes categories?

What should my cash envelopes be? They can pretty much be anything you spend money on.

In order to figure out your cash envelopes categories, you need to look at your past spending and see where you spend your money.

Is it on restaurants, coffee shops, or shopping? Or do you spend most of your money on entertainment like going out to the movies? Or do you spend most of your money buying gifts for certain celebrations during the year?

Think about where you mostly spend your money, if it’s on Starbucks coffee, then create a budget categories for that monthly expense and use cash instead.

Here are the most common cash envelope categories you can incorporate in your monthly budget:

• Groceries
• Eating Out
• Fun Money
• Clothing
• Miscellaneous
• Vacation
• Gas
• Beauty
• Household
• Gifts
• Car Maintenance (sinking fund)
• Home Maintenance (sinking fund)

{CHECK OUT: Sinking Funds That Will Make You More In Control of Your Money}

Basically, after you get paid, you would pull out cash for any variable spending. (Again, variable spending is pretty much everything else that you spend money on every month that’s not a bill.)

Whereas fixed expenses are bills that are due every month for the same amount of money. (And it doesn’t change like variable spending, the amount is fixed, so it’s easier to budget for these fixed expenses.)

Fixed expenses can include cellphone, mortgage, car payment, Internet bill, etc. You won’t need to use cash envelopes to pay for these fixed expenses. You can just leave the EXACT amount of money sitting in your checking account and have your bills on autopay.

However, EVERYTHING else you can pay for in cash AND start using the CASH ENVELOPE SYSTEM.

The cash envelope system will help you stick to your budget better, because it’s pretty impossible to overdraft using cash.

Once the cash runs out on an envelope, that’s it, you can’t spend anymore. (The good thing about cash envelopes is that you won’t have overdraft fees lol.)

And you won’t have to track as many transactions on your bank account. You would just keep track of each cash envelope that’s it.

How to start using cash envelopes?

1. Decide your cash envelopes categories

2. Pull out cash

3. Get cash envelopes printable free (here)

4. Stuff your cash envelopes

5. Keep track of your spending and how much cash you have left in each cash envelope

So, what if I don’t like to use cash?

You can still use the Envelope Budget System without using cash.

Remember, the purpose of using cash envelopes is to control your spending so you can reach your financial goals faster.

But, if you decide not to use cash, that’s ok.

The envelope system could still work.

All you would need to do is leave your money in your account, set up some sort of budget, and create different spending categories.

Once you list your budget categories, give yourself an allowable amount for each budget category.

Use your debit card and then, keep track of your expenses online to make sure you won’t spend more than what you allocated.

You’ll have to be more disciplined with the cashless envelope method since you can easily over spend in any category.

If that sounds too difficult, try the High-Five Banking Method from Sahirenys Pierce. She came up with this cashless method to divvy up your money in multiple checking and savings accounts in order to easily keep track of your spending.

Perks for using cash envelopes:

• You’ll feel more in control of your money
• It prevents you from becoming an impulse buyer since you can only spend what you have
• Makes you a great saver
• Protects you from over-drafting your bank account
• Makes you a more efficient spender
• It makes it pretty hard to overspend

This post was all about cash envelopes that can help you stick to your budget and not overspend.

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