Are you ready to try cash envelopes and get your budget in order? Here are some cash envelope category ideas for you to use!
I understand that it can be hard to get a handle on your finances and curb your spending, especially if you struggle in certain areas of spending and don’t know what to do.
There are so many different ways people keep a budget.
When I first learned about budgeting (as an adult!), I discovered the cash envelope system.
If you really want to get your finances under control, you need to try using cash envelopes to keeping track of your spending.
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What are Cash Envelopes?
Cash envelopes for spending were popularized by Dave Ramsey.
So, what exactly are cash envelopes?
Well, first you decide how much money you are going to spend in each category of your budget every month.
Next, you create separate envelopes for each budget category and write the budget amount on the front.
Finally, you withdraw that total amount in cash and divide the cash among each envelope.
Having cash to pay with (instead of a credit card) helps to prevent overspending and breaking your budget.
When an envelope runs out of money, you need to wait until next month to buy anything in that category.
You will need to choose categories for each envelope. These will most likely be variable expenses – not regular bills like rent/mortgage, cell phone, or insurance, as you are probably paying these via automatic withdrawal.
Why You Should Use Cash Envelopes?
There are a lot of benefits to using cash envelopes:
- You will strengthen your self-discipline.
- Cash envelopes keep you on your budget.
- It will be harder to overspend.
- Handling cash will provide visible accountability.
How to Organize Cash Envelopes
If you tend to overspend in a certain category (like, coffee at Starbucks), then using cash envelopes can help you curb your spending and keep you within your budget.
Once the money is gone from the envelope in that category, you are done spending for the month.
So, if you eat out often, you would want an “eating out” envelope.
Or, if tend to buy lots of makeup or accessories, you could have a “makeup” or “accessories” envelope.
You get the idea.
Start by selecting a few categories where you tend to overspend.
Simple Steps to Budgeting Using Cash Envelopes
- Select budget categories for the cash envelopes.
Choose categories where you overspend (or categories where you could benefit from using cash only).
- Determine the budget amount for each category.
- Label each envelope with the category title and budget amount.
- After receiving your paycheck, withdraw the amount of cash needed to fill the envelopes.
- Fill each envelope with the correct amount of cash.
- When you go out, take the corresponding envelope with you. (If you forget it, drive back home and get it so you are not tempted to use a credit card! This is a good lesson in personal discipline and sticking to your budget!)
- Spend only what cash is in the envelope, when you run out, you need to wait until next month!
You can use ordinary envelopes, or you can get some fancy ones like these.
Here is a long list of some potential ideas for your cash envelope categories. I would stick to 5 – 10 envelopes, leaning closer to the smaller amount to make it easier.
Cash Envelope Category Ideas for Your Budget
Here are some cash envelope category ideas.
Remember, you can customize the titles and categories any way that fits your lifestyle and spending habits:
- date night
- out with friends/family
- fun, spontaneous spending
- household items
- cleaning items
- personal fun spending money for you
- personal fun money for each family member
- spouse’s personal fun spending money
- allowance for kids
- babysitting funds
- kid’s clothes
- work clothes
- school clothes
- seasonal clothes
- school lunches
- work lunches
- dining out
- take out/delivery
- craft supplies
- gym membership
- car maintenance
- public transportation
- road trips
- Halloween costume
- holiday outfits
- holiday food
What if I Run Out of Money in an Envelope?
Don’t move money between envelopes. This is a great way to learn discipline in spending – If you run out of money in an envelope have to wait until next month!
Get creative about finding ways to stick within your budget (eat leftovers, go to the park instead of the movies, etc.)
What if I Have Money Left?
You can take a little bit to celebrate, but stuffing it into a savings or investment account (or to pay off debt!) would be even better!
Cash envelopes can be very helpful if you want to get a handle on your finances, take back your budget, and stop overspending. A little bit of self discipline and you can stop overspending and start saving money!
What cash envelope category ideas do you have? Which ones have you used?
For more ideas on how to make extra cash to put in your envelopes, check out these articles: