Cash Binders in many colours
Budgeting

Cash Envelope System

I started using the cash envelope system way back before I even knew this was a budgeting method. It began back in 2010 when I first moved out of home into my own place. I was a young professional just moved into an apartment in the city centre and I was loving life, a little too much.

Every month I struggled to pay my rent and electricity, not because I didn’t earn enough. But because I just didn’t manage my money well at all. On a night out I would just keep tapping my card, not paying attention at all to how much I was spending. Something had to change.

  1. Cash Envelope System Basics
  2. How to Start using cash envelopes in your budget
  3. What is a cash envelope binder
  4. Why is the cash envelope system good for beginners to budgeting
  5. How to chose what envelopes you need
  6. Youtube cash stuffing video

Cash Envelope System Basics

I got two paper envelopes and named one Rent and the other Electricity. Each week when I got paid, I removed the money from the bank and put it into the envelopes. My rent was €550 per month and electric was about €50. So, I needed to put aside €600 a month. I divided this by 4 to get a weekly figure of €150. This way I was taking care of my essential bills first. Now when I went out, I could only spend what was left in my bank account.

How to Start using cash envelopes in your Budget

The first step to using cash envelopes is to look at your finances and see where are the biggest issues and start there. I acknowledged my issue was over spending on nights outs. To combat this, I took the temptation to overspend away. I couldn’t overspend now as I didn’t have access to that money when I was out. It was at home safe in its little envelopes.

Another way to use the cash envelope method would be for me to have given myself a going out budget. So, after my bills were paid, I had €100 available to spend on going out. I could take that €100 out of the bank and put that in an envelope marked going out. I could spend this money as I pleased throughout the week but once it was gone it was gone. If I spent it all on Friday night then that was it until I could refill it again on the next payday.

A big spending area for people can be groceries, with spending of up to €800 a month for a family of 4 or 5. When people start using cash from a groceries envelope they find they spend less. Some even  seeing savings of over €200 per month.

What is a Cash Envelope Binder?

Your Cash Envelope Binder is a ring binder with durable reusable zipper envelopes. These can be personalised to what you need them for. It is a way of keeping all your envelopes together. You can also use cash envelope trackers to see what you have being spending your money on throughout the month.  

Other than personalising the envelopes with what categories you want, you can also choose what colour binder you would like and choose the colour of the text. So, can be completely made to suit your taste.

Click on this picture to be taken to my Etsy shop where you can see the choice available.  

Pink cash envelope binder with zipper envelopes and tracker cards
Cash Envelope Binder

Why is the cash envelope system good for beginners to budgeting?

This budgeting system is simple but extremely effective. It is also very efficient, which I think most people can agree that not having enough time is usually top of the list when it comes to not budgeting. Once you have your budget done. Leave the money in your account for the bills you pay by direct debit and withdraw the money for your cash envelopes. Ideally best to do this on payday.

How to choose what envelopes you need?

Firstly, I would look areas where I need to spend but tend to over spend in.

Groceries

Fuel

Eating Out

Clothes

Kids

Self – Care

Using trackers in the envelopes, lets you record your spending. Looking back over the trackers will help you see patterns in your spending. This is so useful when you are looking at areas in your budget where you could make savings.

Brown Cash Envelope with gold vinyl text
Cash Envelope Brown

Next, I would look at envelopes for sinking funds. These can be annual expenses or big ticket items you are saving for. Most popular categories would be;

Car Insurance

Home Insurance

Holidays

Christmas

Car Maintenance

Birthdays

We know these expenses need to be paid so by budgeting and putting small amounts away in your envelopes each month helps you be prepared when the time comes.

In this video you will see how I arrange my cash envelopes.