Can A Cash Envelope System Curb Spending?

cash envelope system

I have no doubt that the cash envelope system will curb spending, particularly if spending is a big problem. Is it the ultimate solution? I don’t think so. Let’s dig in!

What is This Thing?

I’ll be completely honest with you here. This is a very old-school method of money management. I will say, however, that there is a reason these things don’t completely die off! Some things just work well for certain people, and that is okay!

The cash envelope system is far from complicated.

First things first, you need to assign categories to your spending. If you follow this guide on creating a budget, you will be in great shape and have your categories figured out!

Once you’ve broken your spending out by category, all you need to do is write each category out on an envelope.

At the beginning of each month, you simply add the cash that your budget accounts for to each envelope and spend it as the month goes on. Nothing complicated!

Once an envelope runs out, as tempting as it may be, it has to stay empty until a new month starts.

That’s Actually Really Easy

Sure is! Now to rain on your easy parade.

Unless you are completely new to budgeting and have a decent amount of work to do in leaving your spend-a-holic ways behind, a (literal) cash based budget is not ideal.

I’m sure this is mostly just the millenial in me talking, but cash is just not the easiest thing to pay with any more. I honestly wouldn’t even begin to know how to pay a utility bill in cash, among other things. To add to that drawback, this system requires that you go to the bank on a monthly basis and withdraw your full month’s worth of expenses.

You then have to count out each required amount… Honestly the more I write about it, the more laborious it sounds. Maybe this budgeting method isn’t so easy!

cash budget
Photo by Pixabay on Pexels

Can We Get Some More Positivity?

A fair question. Yes.

What are some great things about this system outside of its simplicity?

Once it’s gone, it’s gone. A visual representation of an empty envelope titled, “Restaurants” is an excellent reminder that you have gone out to eat a lot this month. The entire point of budgeting, after all, is to avoid mindless overspending.

Another pro?

In the same way that buying new workout clothes makes you more likely to be excited to go to the gym, a physical reminder (the envelopes) of your efforts to improve your financial situation will almost certainly keep your financial journey on the front burner.

Where it needs to be if you want to see real change.

Money is not everything, and it can’t buy happiness, sure.

If, however, you were able to put yourself in a situation where bills were not your number one source of stress, I can’t imagine you’d be too unhappy about that.


In Summary

A cash envelope system is probably ideal if you are completely new to money management and want to get your feet wet. All it really requires is a few envelopes and some time set aside to do some arithmetic! Once you have a full understand of where your money goes each month, you can explore things like budgeting apps or build your own spreadsheet!

You could even consider graduating to the 50/30/20 budget that I wrote about here!

If you like the 50/30/20 budget but also like the cash envelope system, you can even combine the two methods as suggested in this Nerdwallet article!


Thank you so much for taking the time to read this article! There are dozens of others here that can help you level up your financial situation!

If you ever have any questions, comments, or suggestions please do not hesitate to reach out.

My contact information can be found here!

– RCG

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