5-Step Cash Envelope System For Beginners

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5-Step Cash Envelope System For Beginners

The cash envelope system is perfect for getting rid of any unpleasant surprises at the end of the month. At Baddies & Budgets, we know how easy it can be to lose track of your spending, and we want to help you stay in control.


What is the cash envelope system?

The cash envelope system does exactly what it says on the tin, in that it separates your physical money into various envelopes. These categories cover your monthly spending options- that's things like 'groceries', 'clothes', 'travel', 'savings' and so on. 

To develop your cash envelope system, you should choose categories that suit your lifestyle, then apply a budget cap to that envelope. For example, you might say:

"this month I can spend $300 on groceries, $150 on travel, and $120 on clothing".

This system allows you to divide your monthly budget appropriately, so that you don't overspend. 


Who is the cash envelope system for?

Anyone and everyone! But particularly those who want to keep an eye on their spending. In today's world, a lot of things are paid for virtually. With debit cards, credit cards, and Apple Pay, your balance remains out of sight, but decreases more and more with each purchase. 

The price we pay for such convenience often exceeds out estimations, and countless people are in debt because of it. 

In contrast, the physical act of holding cash in your hand and exchanging it for something has a psychological effect; you appreciate its value. By using cash instead of plastic, you're more than likely to think about how you spend your money, because once its gone, its gone. 

Overall, the cash envelope system makes it easier to budget. That means it's great for people trying to pay off debts, save money or even for those who simply who want to understand their spending habits. 


Get your cash envelope system started with these 5 easy steps.

  • Monitor your spending for a month before you begin 

This will help you to work out how much money you should assign to each category, and will also help you to pinpoint weak spots in your spending. 

For a full breakdown of your spending, consider trying our all in one baddie budgeting system

  • Create your cash envelope categories 

Write down every possible category you have. That could be savings, holidays, emergency funds, gifts, paying off any credit cards or regular bills, travel costs, rent and so on. 

  • Calculate your cash envelope goals 
How much does each category need? Refer back to the month of monitoring for tips on where you might be overspending. Be realistic about these categories - you want to be able to stick to your budget.
  • Arrange your cash envelopes 

If you're sticking to a tight beget you may want to use just plain white envelopes for each category, labeled with the title of the fund. If you want something a little more hardwearing and distinctive, you can invest in a set of stylish cash envelopes that you can use again and again. 

You can also store all of your cash envelopes in one place with our personalized custom binders

Find what works best for you. Some people, for example, might want to keep certain envelopes separate from the rest to avoid temptation. 

  • Never take all of your cash envelopes with you at once

For obvious reasons, carrying all of your cash with you at once would be a bad idea. Whether you spend it all yourself, lose it, or somebody steals them from you, the fish is just too high. Leave them in a safe space at home until needed, and NEVER carry them all with you at once. 

Remember - you should only be carrying your wallet cash envelopes for your week to week expenses. 

To make this easier, you can try our smaller, travel sized cash envelopes to take with you instead.

Why not visit our website for most useful tips and tricks to help you budget like a baddie.