Why Cash Envelopes Are My Secret to Staying on Budget


My envelopes are well worn and probably ready for replacement. They embarrass the living heck out of my husband when I pull them out at the store or restaurant. But these right here, these are my biggest secret. They are the number one thing I tell clients that will lead them to success on their debt free journey.  

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It doesn’t matter if it’s clips or envelopes, cash hurts to spend. You think twice and you spend differently.  You make it impossible to “blow” your budget. If there’s not enough money in the envelope, the item can’t be purchased.  You have to get good at planning with this system, but I guarantee it will help you decrease your spending.  I’ve been at the grocery store and have had to ask the cashier to put some things back a time or two. Eventually I became pretty impressive at totaling as I went.  And if you really want to be a nerd, you can buy a hand tally counter for around $10 or less. 

Setting up your cash envelopes

Common categories for cash envelopes are groceries, travel, dining out, kids needs, blow money (aka “allowance”), clothes, toiletries and entertainment.  Everyone’s going to have different envelopes depending on what you shop for and spend in person the most and label them differently depending on how you budget.  I combine toiletries and groceries to one category.  A lot of people don’t.   As long as you’re not severely overfunding an envelope, rolling what you don’t spend from one month to the next can be a fun motivator for things like clothes to save up for a fun spending day. 

When we spend with a credit card or even debit card, it doesn’t activate our pain points the same as cash.  We get that card back and don’t physically have to let go of anything, so it doesn’t register the same.  Research has shown that people are willing to spend up to 83% more for an item when they pay with a credit card.  On average, they actually spend approximately 12-18% more when paying with a card. 

Just say no to plastic

Credit card use is on the rise every year.  Think about it. When’s the last time you even saw a vending machine that didn’t accept credit cards?  Businesses make it so convenient and easy to do a magical swipe of the card, why wouldn’t you “add fries to that”?  It wasn’t so long ago that credit cards weren’t even commonly accepted at fast food chains for fear of slowing down the service.  McDonalds was one of the first to change that in 2003, and by doing so, their average ticket increased over 50% when consumers pay with a card. 

Have I got you thinking about converting to the cash envelope system?  I love the simplicity of my banking envelopes, but anyone who knows me will tell you I’m not the most stylish person you’ll meet.  Check out these fabulous hand-made cash envelope wallets! Happy shopping!