How much of the hard-earned money do you wish to keep each month? Try using cash envelopes as a means of budgeting. Ramsey’s method of using cash envelopes is not revolutionary; it has been around for decades. Some people, though, remain confused about its purpose and inner workings. Let me give you an example! (And if you read this article all the way to the end, I’ll show you how to make using cash envelopes hipper than they ever have been.)

May I Please Have an Explanation of the Cash Envelope Method?

Using the Cash envelope system, in which you keep all of your cash in clearly marked envelopes, you can easily keep track of how much money you have available for each area of your monthly budget. If you keep some spare change in an envelope, you can always quickly check how much spending money you have left at any given time of the month. That’s so easy, right?

If there is one area of your budget where you always wind up spending more than you had anticipated (hello, food! ), then you should start keeping an envelope with the exact amount of money you had planned to spend in that category. You should only spend what is in your cash envelope when you go shopping. That’s all there is to it. Overspending is eliminated as an option because you know that once the money is gone, it’s gone for good, allowing you to more rapidly achieve your financial goals.

Explanation of the Cash Envelope Method

We go overboard with our expenditures because nobody or nothing tells us when to rein it in. Now is when you’ll want to get out those cash envelopes. They’re a fantastic resource for helping you stick to your budget. To utilise them properly, do the following:

Put together a budget.

The first order of business is to make a budget, so start on that right away. Make a list of all of your monthly expenses and a separate one of all of your monthly earnings. If you want to have a balanced budget, your income must be equal to your expenditures. This shows that you are giving each and every dollar a function. If you’re searching for a mobile budgeting solution that can help you remain on top of this category, the app is worth checking out. There is no charge!

Take into account the budget categories for which a cash envelope will need to be generated.

When making your budget, devote special attention to the areas that tend to overrun. You probably know the ones in which you consistently incur overage costs. The envelope technique is effective in this context.


For the sake of argument, let’s say you are paid twice a month and have put aside $700 a month to cover the expense of food. When you are paid for the month, take $350 out of your account and put it inside an envelope. When you are paid, immediately do this. In the envelope’s label, write “Groceries.” After receiving your second paycheck, follow steps 1 and 2 again to enclose the remaining $350. Your food budget for the month is $700.v