Budgeting | Personal Finance

Quick Start Guide To The Cash Envelope System

You want to know one of my main secrets to paying off our $93,000 mortgage debt in under 2 years?  This is it.  The Cash Envelope System.  This quick start cash envelope system kept my overspending rear in line for two straight years when nothing else had worked in the past.  

Every month, I took whatever cash was left in my envelopes, filled out a principle mortgage payment slip and slapped extra money on our mortgage payment.  You know what?  It felt darn good to feel in control for once.  

It felt peaceful and empowering to know EXACTLY where our family’s hard earned money was going every single day!

Maybe you’ve heard of the cash envelope system but have no idea how to get started.  This post is a simple quick start guide to the cash envelope system to get you budgeting in a hurry.  It’s a cash envelope template.  

If you plan to do this with your spouse be sure you read my article: The Cash Envelope Budgeting System for Couples after.

Note that this post is geared toward helping you get started quick.  If you’d like to make an actual formulated plan and go deeper be sure you check out my course The Cash Fueled Life (this is a 2-3 hour course that is a very hands-on way for you to dive into creating your own cash-based budget whether your spouse is on board or not).

Why You Need to Try the Cash Envelope System

If you are a person who wants a simple and tangible way to control your spending, envelope systems just work.  Why?  Because you can only spend the physical cash you have, there is not swiping the card.  You either have the money or you don’t.  It is one of the simplest forms of budgeting that I know.  It takes about 3 months to get into the glow of cash only spending- but I know you can do it and I’m going to quickly show you how.

First Things First: Find the Cash Envelope System Wallet that Works For You:

There are tons of options for how to store/organize your cash.  Here is a list of options.  Figure out which one works best for you and how much you want to initially invest.

Option 1- A Real Wallet:

  • For The Fashion Focused Person: So after sticking with this system for awhile I decided that I wanted a more “discrete” and long lasting real wallet so I invested in a Savvycents Wallet (under $30) from Amazon which has held up great and keeps all my wallet contents together including my cash.  I really like that it offers a spot to keep the coin change together on back.  This wallet comes in a ton of plain colors and fun patterns.  
  • I’ve been using it for 6 months and love it!  I get tons of complements on this wallet.

Savycents Wallet Envelope System

Note: In labeled the image below with these categories to show you how I divide my envelopes up but they come blank so you can personalize them to your own budget needs.
Cash Envelope savvycents wallet review

Bella Taylor Navy Solid Cash System Wallet -If you aren’t into funky or bright colors these Bella Taylor wallets look nice and also come in prints that remind me of Vera Bradley style patterns. -Under $50

Deluxe Executive Envelope System: Dave Ramsey’s Financial Peace University – Under $22

This one has a way to track your spending with pen and paper plus the envelope cash holders.

Buxton Women’s Coupon and Receipt Organizer Wallet with Compartment, Plum – Under $10

This wallet comes in several colors including black, red and animal print.

Option 2- A Paper Wallet

Regular Envelopes or something like these pocket size accordion files that I found at Target in the dollar section might be great for starting out.  The only flaw is that they don’t really do well with loose change.
SpendVelope Envelope Budget System– These are a paper based envelope that you can divide your money into and each envelope represents a different budget line item.  These come with a way to track to your spending on a paper you store inside of the envelope so you can have a visual running balance of what’s going on inside the envelope and how much you’ve spent/how much is left over!

Globe-Weis Poly Zip Envelope, Check, Open Side, Assorted, 5/Pack – These are clear zipper type pouches.  These would be nice because they would keep your loose coins together for each category when you spend cash and get change back.

Magnetic Cash Envelopes by Divvy Up, Set of Five. Divide. Spend. Save. Budget Your Way to Savings. (Brilliant Budgeting)– These are a sturdy fabric envelope.  They don’t zip up but they do have magnetic openings the stick together, so even though they wouldn’t be great for loose change, they would be quick and easy to use when accessing your cash fast!

Option 3- The Thriftiest Wallet Option

The cheapest option for giving this system a go is grabbing an inexpensive coupon according file folder.  These are typically found in the “office” section of your local dollar store or the Target Dollar Stop.

If you want to get crafty and jazz up the pocket size accordion files, check out my post on How To Make Your Own Envelope System Wallet.

2 Pk, BAZIC Assorted 5-Pocket Expanding Files (Coupon/Personal Check Size)– Under $8 for 2.

The Pocket File Accordian for Cash Budgets

Step By Step Quick Start Guide To Cash Envelope System

Here’s my Cash Envelope System Setup Video if you are a visual learner:




Step 1: Set up your cash envelope categories.

If you don’t know what your budget categories are- it could be that you don’t have a real budget in place.  I recommend that if you are brand new to budgeting that you get The 90 Day Budget Bootcamp which teaches you how to get your family finances organized month by month. When you are ready to start envelopes (meaning you know what spending categories you need them for) you’ll want to label whatever “wallet” you are using with categories.  I use labels and pen or permanent marker.  The categories are the areas that I overspend on the most.  Here are some cash envelope category ideas:

  • Groceries
  • Allowance
  • Dog
  • Baby
  • Cleaning Supplies
  • Restaurant
  • Note: Your utilities, gas and other things can obviously be paid using a debit card/check.Cash Envelope Category Ideas



Step 2: Go to the bank and divide up your cash.

  • Go to the bank and get out your cash budgeted for your categories.Yes, it is a little work but once you figure it out you won’t have to do it again.
    • If you have $30 budgeted for gas for the week, you’ll need to make sure you get out a $20 bill and a $10 bill for that envelope.
      • So for example (these are just random weekly numbers):
        • Groceries- $75
          •  3- $20’s   1- $10  1-$5
        • Allowance- $25
          • 1-$20  1- $5
        • Dog- $25
          • 1-$20  1- $5
        • Baby- $25
          • 1-$20  1- $5
        • Cleaning Supplies- $10-
          • 1- $10
        • Restaurants- $5
          • 1- $5
    • When you get to the teller, you’ll need to flip over the withdrawal slip and ask for:
      • 6-$20’s, 2- $10’s, 5-$5’s
      • Keep these numbers on a little slip of paper in your wallet so you don’t have to remember each time.
    • Divide and conquer.
      • Split your money up into your plastic coupon book and keep it in your purse like a wallet.
    • You only have the money in those divisions to use for those items.
    •  When the money is out, it’s out!
    • You’ll have to do this little thing called “waiting” until your envelopes are filled up the following week.

The Payoff:

Beyond just helping us pay our mortgage off 13 years early, something really interesting happened.  My husband and I stopped fighting about money.  We were in control.  We had a plan with a budget in place.  We knew exactly how much we were going to spend.  I only spent the cash I had and it was an amount we agreed upon on payday.
Have you heard it said that two things that married people fight about are money and “marital relations”?  How would your life change if you could just eliminate money arguments with your spouse?  All you need is a real budget in place, the right envelope system for your needs, set up your categories, go to the bank to get your cash and spend only what you have (or don’t spend it all and use whatever is left over to victoriously knock out your debts one by one.)  You can hold down a budget, you just might not have found the right
Please feel free to comment or post questions you have.  I’d love to help clarify things as well as hear from other people that have found success with cash systems.  I hope this quick start guide to the cash envelope system has helped you get your mind around a simple solution to budgeting each day.

If you want to dive a little deeper into budgeting check out my other Budgeting posts:

The Cash Envelope System for couples


Kim Anderson

Quick Start Guide to the Cash Envelope System. If you want to start budget ASAP this system is just right for you. No spreadsheets or formula's needed. A Simple way to start bossing your money around today.

The Quick Start Guide To the Cash Envelope System
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The Quick Start Guide To the Cash Envelope System
If you are new to cash envelopes or are just returning, you can get started pretty quick with this step by step quick start guide to the cash envelope system of budgeting.
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Thrifty Little Mom
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  1. Thank you for this post. I am looking to do a monthly allowance instead of weekly. My question is how do I get started the first month? We put most of our expenses onto our credit card and usually have a high monthly balance that we pay off each month. (Hence the need for this system). My concern is, this first month I will still need to pay of the high balance on the card and take out the necessary funds for my next months budget. How do I effectively do that? Any tips or advice there? Thanks so much!!

    1. If it were me, I would pay off the Balance and stop using the card completely if you are able to do that. It may take you a month of not using the credit card to get yourself ahead otherwise… Does that answer your question?

  2. Pinning this to my Dave Ramsey inspiration board. I love this post. We switched to cash too and it made a huge difference. We just paid off our house this month. It really changed our marriage. We were the same. We never fight over money now. I love the cash system so much I started making and selling my own pretty envelopes on Etsy. If you have a chance, please check out my store.


  3. I live in South-Africa and found your post via Pinterest and I am so glad I did! I am 22 years old, with a stable job, single & living on my own. I have been working on budgeting since I was 18 and moved out on my own for the first time to go study – and I still haven’t managed to find the perfect budget. I tried the cash envelope system and it worked so well for the first while – however, I didn’t keep my weekly cash in a separate envelope, but in my wallet. I found that this made it easier to swipe my debit card when I didn’t have enough cash left, because well, it was right there – but this caused my budget to fail. I will be placing my weekly cash in an envelope now so that I can steer clear from my debit card and avoid that temptation. I would like to pay back all of my study debts and be responsible for all of my own bills (which my dad is helping with at the moment) before I settle down. And from all of the comments I know that the cash envelope system will help me to get there; so thank you for the great post!

    1. Leah, thank you so much for taking the time to comment! The cash envelope system will work great, just give yourself time to adjust. It will take you about 3 months to get the hang of the system and get in a groove so just keep going! You are on an AMAZING path being 22 and already starting to think about budgeting your money wisely and paying off debt. If you stick with it, you are setting yourself up for serious financial success!!! Good luck and keep in touch so I know how it’s going!!!

  4. Why did I think this was so hard??? Thanks for the video! Can’t wait to call the Dave Ramsey show and scream “We are debt free”!!

    1. Like most things it can be really intimidating if you’ve never tried it before. Glad you found the video helpful! Let me know when you pay that final payment!

  5. I actually do use my cards for rewards. BUT you MUST be diligent about paying it off. I’ve used it for b days and xmas. But paying it off every WEEK is a must. But it is easy to get into trouble. So I use digital envelopes.

    We are moving into a more expensive house. Our neighborhood just got too dangerous. So we took the plunge. Things will be much tighter. So I am a bit nervous.

    1. Hey Michelle, thanks for taking the time to leave a comment. It sounds like you have a firm grasp on your finances to me. The envelope system is just a simple way to cut back spending overall. It works for some people and not for others. I hope you enjoy your new house. Feeling safe and secure in your home is a REALLY important part of having a sense of peace in your life.

  6. Hi! My husband and I have just started looking into budgeting, snowball debt payoff etc and the more I am reading about the cash envelope, the more I want to try it! Question though, what kind of money do all of you have in the bank? That isn’t a personal question where I want to know an amount. I just mean, we get our checks weekly, you keep in there for bills etc and withdraw the amount you need to put in your envelopes. Is there anything left in the bank after all of that?? Just need some clarifying and would love anyone to help. Thanks so much!

    1. Jennifer, this is a good question. The first thing you have to do is put it all on a paper. You have to see where you are at before you can figure out what goes in the envelopes. You can use the printable from my Budgeting 101 post-https://thriftylittlemom.com/2014/02/21/budgeting-101-boss-your-money-around/ If you write down all your bill costs like rent/mortgage, utilities, debt payments, then you can see what you have left over to take out and divide into your envelopes. Let me know if that doesn’t answer your question.

  7. Hey Kim I’ve been using this cash envelope system for a while but I’ve been pulling cash out once a month. Tell me the benefit of doing it once a week? Is there something I’m missing?

    1. Amber, you can do this however you wish and you should stick with what works. In my case, when I got it all out at the beginning of the month I was tempted to go over my weekly allowance on things like groceries. Meaning, when I got to the 17th, I had spent my whole months worth of groceries. It tempted me to dip into other categories and future weeks instead of just getting enough out for a week at a time. But that is just me. If you can hold it down for a month at time keep doing what you are doing! Great question!

  8. My husband and I have used this system for years and it works very well. We actually load our envelopes monthly. We have two envelopes (one for things I buy all the time and the other for things like home repair, car repair, sewer, and other expenses that we may need cash for but aren’t everyday expenses. We also use play money to keep us accountable in areas of saving. For example, we don’t remove money from our account for the money we set aside every month to be able to purchase our next vehicle. We put play money in that section of the envelope. That way we always know what we should have set aside and we don’t spend it out of our account. It has helped us tremendously, especially with larger purchases.

    Absolutely love the system and we have adapted it to fit our needs over the years so it still works for us today. Another tip: be sure to check your budget monthly at first, especially with your spouse. After the first year, be sure you have 1-2 check ups of your budget with your spouse EVERY year.. It helps keep you both on the same page and gives you an opportunity to adjust the budget together if something isn’t working or if there has been a significant change in your lives.

    1. Thanks Jennifer, this is really great advice and I appreciate that you took the time to tell us about how you use the system because I’m sure that it will help someone else!

  9. Hello! This is something I am not sure will work for me but I’m willing to give it a try. I’m in a place where I’m ready to make a change and sometimes you have to get “radical.” I’m wondering about the weekly process, though. Have you tried a bi-weekly system instead of a weekly system? I am paid bi-weekly, and so it seems to make sense to do this bi-weekly instead of weekly. Just curious if you’ve tried it and how it worked for you.

    1. Alicia, I would say that it depends on where you are at. If you don’t really have any money saved up and you rely on that bi-weekly income, then you should load your envelopes as you get paid. Maybe aim to get gas on Fridays and Groceries on Mondays. Then you could just fill the envelopes you need with the money you have until you get paid again. The best thing to do is experiment until you get a system that works smoothly for you. It will come eventually.

  10. I have been using a similar system (of my own invention) for several years. I, however, have taken it one step further. I have “long term” envelopes for major expenses. As an example, I made a list of everyone for whom I need to buy birthday and/or Christmas gifts during the year. Next to their name I put what I determined was my budgeted amount for their gift(s). I added it up, divided the sum by 12 and put the resulting amount into my gift envelope each month. I did another envelope for insurance (all types) and property tax bills.
    Another thing that I do with my weekly envelopes is to empty any remaining cash from them at the end of the week. This money becomes savings.
    Dave may have covered these issues in his book (I haven’t read it – yet) but this has worked well for me for well over 20 years. I am always debt free!

    1. Kate, those are great tips thanks so much for sharing how you do your envelopes. I’m positive that your ideas will help someone else kick their own envelope system’s up a notch. I appreciate that you took the time to contribute!

  11. I’ve been looking for some answers on starting my envelope system and I’m so glad I ran across your page! I’m a Dave Ramsey fan as well! I have my envelope system set up for bills, phone, paying off my car, gas and spending. I contribute to each envelope weekly. Do you think I would need to add any other envelopes? I have no kids and live with my parents, I just didn’t know if I should be adding anything else. I don’t really bring home much of a paycheck, so I don’t have a lot of play room.

    1. Amber, it sounds like you have the basics covered. I think that is what you are going for. Just keep on doing it and you’ll be on your way to a life long budgeting mindset! Awesome that you’ve already started!

  12. i have a question about gas. What if you budget say 80 per week for two vehicles but you end up having to travel more and need to refuel? Is there ever any money left in the envelope?

    1. Well, in our case we plan ahead for those types of situations. So if we know we are traveling for business or leisure we pad the gas budget that month with what we think we will need for gas. When we were paying off our mortgage I typically paid very close attention to my gas situation and if I was getting close to running out of money in the envelope I had to cut back on driving. I started combining trips and carpooling to prevent going over the budget and needing to add money to the envelope. After a few months I figured out exactly how much money I needed to get through a typical week and put that in there. I typically did not have money left in that envelope.

  13. How can I convince someone who says”they don’t want to work just for bills.” We seem to waste lots of money because he feels the need to spend and gets upset if I hold onto money and try to save it. Is there any suggestions to help convince him this is a benefit to do? HELP PLEASE

    1. Margarita, you are in a really hard spot. In this case, it may take an outside voice other than yours to help him “see the light”. You may need to seek the help of a couples counselor as they can be an outside voice. I don’t know if this person is racking up credit card debt or if they are just spending what you have coming in in cash. I’m wondering if he grew up having very little money and so now as an adult he doesn’t want to be restricted. It’s a very delicate situation. In my own marriage when conflict comes up I try to remember a “A gentle answer turns away wrath, but a harsh word stirs up anger.” Proverbs 15:1. Therefore when discussion get heated, I try to not let my voice or body language show anger as to make the situation worse. As long as you have a healthy relationship and aren’t afraid to talk to your husband openly I would wait for the right times to talk about it. Don’t talk about your concerns when he gets home from work because he’s been there all day working, he’s probably most defensive then because he is tired. Talk about it during a time when neither of you are overly tired or when the timing seems like you approach the situation with tact as to not go from a talk to a fight. One last note, you may not be able to “convince” him to change anything. You may have to “show” him how to change. Maybe you start spending less. Maybe you start using the cash envelope system and keep whatever is left over in a “savings” envelope so that you guys have a little cushion should you need it. At least then you can have a little piece of mind while you guys walk through this journey together.

      One last note- If your a Christian I would encourage you to pray for him everyday that God would open his eyes to the situation and help him to see the value in managing his money rather than just spending it. Be patient as you do this because it probably won’t happen overnight.

      I hope that some of this information has given you some kind of thoughts to work off of. Let me know if you have more questions!

  14. I really like this idea for budgeting, but I’m a little worried about how to get started and apply it to my life. My pay checks aren’t always the same amount and I’m afraid I’m not going to have enough money in my envelopes to get by for the week. What should I do? I would like to start budgeting so I can get rid of my debt once and for all and enjoy some financial freedom.

    1. Kristy, I’m not a financial adviser so I can only say what I would try if I were in your shoes. I would simply wait until you get your check and then divide it up. Leave the money you need to pay bills like utilities in your account. Only get out cash money for things like groceries, eating out, maybe gas or anything you usually overspend on when you have a card to swipe. If you are living on a shoestring right now your best bet is to go a little gazelle like Dave Ramsey talks about and get super serious about paying off debt. If that’s the case, you’ll find ways to drive less, eat in more and save money on the expenses that you have total control over. When my hubby and I decided to get rid of our mortgage we stopped eating out, started buying only the food we needed for breakfast, lunch and dinner and few snacks and started being super mindful about how much we were driving. We did as much free stuff as we could do and really didn’t shop for anything we didn’t absolutely need for 2 years. I think the best thing you can do is experiment. If you are worried about not having enough for bills, start simple and just use cash for groceries until you get the hang of it. When you get more comfortable with the system and how it works with your income, you can add more categories to your envelope and start relying on cash.

      Good luck! Please let me know if you have anymore questions and keep me up to date on your experiment.

  15. My wife and started doing this 40 years ago and it has worked perfectly. My wife is brilliant.

    1. Pete, that is super nice of you to say about your wife. And I only wished I found out about this system earlier!

  16. This is such a great idea- thanks for sharing! I find myself living paycheck to paycheck and stressing if I am going to have enough funds for the month, especially in the summer planning for vacations! I think I will give this a try and like you said be more aware of where my money is going.

    What day do you find it best to re-up, Monday?

    Did you and your husband both have a separate wallet system to adhere to each budget?

    1. Amanda, I re-uped on grocery day which was usually Friday I think. My husband just had two sections in his wallet so he did his allowance and gas money. Otherwise he didn’t really spend much cash. I was the one who did all the family shopping. I wrote a post about Couples Using the Envelope system that gives you more details about how we did stuff as well as some tips. https://thriftylittlemom.com/2015/02/26/the-cash-envelope-budgeting-system-for-couples/

  17. Hi Kim,

    So glad I stumbled across this article. I’m just about to start budgeting in a bit more detail and whilst I might not use the envelopes, I certainly want to start capping what we have for groceries, entertainment etc so we have more control over our outgoings.

    I’ve also seen a couple of references to Dave Ramsey’s book this week so I think I’ll go ahead and make the purchase!

    Best Regards

    1. It’s a great place to start. Dave Ramsey kind of gets you fired up and makes you believe you can be debt free no matter where you are in your journey!

  18. How hard would this be to use if you are paid monthly and only have one income. So would really like to try this but not really sure about how to even start. I only get pd on the 20th of each month.

    1. Rachel, the first step is to sit down with a piece of paper and pen and figure out how much money you spend on EVERYTHING. I’ve got a free printable you can use My Free Printable Budget Sheet to get you going. Just print it out and you would only fill out one column. Figure out how much you are spending on everything. Once you do, fill out your income information in the same column. Once you have done that, see which items make sense to make into an envelope. Groceries, allowance, gas, eating out or whatever categories you can easily control with cash. You can continue paying your bills with your debit or whatever you use. The envelopes are to help you control in categories that you usually go over in. If this is the first time you’ve ever sat down and started bossing your money around, you may not even know how much you usually spend. The key is stay within what you bring in each month with these envelopes. It’s to help you control spending without having to track it all the time. What you have in your envelopes is what you have. I hope that helps. It’s supposed to be simple but not everyone has a simple accounting situation. I hope that answers your question and gets you going. Good luck!

  19. I just made a savings wallet today! I’m super excited to start using it, and to start actually saving my money. I put pictures of places I want to go on it as motivation to not spend over, and to save my money. 🙂

    1. Maggie, I love your idea for putting up pictures of places that you want to go as motivation. Would you mind telling me about a few of the pictures you have up?

  20. We have been using our cash envelopes for a year now. Paid down some serious debt living on a cash system. Thanks for sharing this video.

    1. Amber that’s AWESOME! It’s crazy how just simply switching to envelopes can keep you from over spending and help you tackle debt!

  21. Does this really work well when the majority of your money goes to bills that you’d be paying with a debit card? Our gas and groceries are just a small percentage of our monthly bills. Also, as for groceries, did you start out using a calculator and adding eeverything up at the grocery store so you didn’t go over budget? Would be embarrassing to wait till you got to checkout…

    1. Chelsie, this method is good for anyone who wants to keep overspending in check. Most of my money goes to bills too. However, when I used to use debit and credit cards for spending on everything else I was always going over budget because I could just swipe and not think about it. With cash, you only have what you have in cash and so you actually have to pay attention to how much money you are spending. And yes, when I went to the grocery store, I had to add up what I bought as I went to keep from getting to the register and not having enough cash. Hope that answers your questions!

      1. I round up or down as I throw items in my cart. If it’s $3.25, I round down to $3. But anything over $0.50, I round up. I keep a running total with every few numbers that I write down. It hasn’t failed me and usually I have overestimated by only $2 to $3. I tried using a calculator but then I’d forget if I had entered in an item. This way, it’s written by the item on my list. Hope that helps. Love this blog.

        1. Hey that’s really really helpful advice! Sometimes calculators mess up and then you have to wonder if it’s worth doing over. lol Thanks for the tip!

  22. not a young mom, but I am an old grandma. All advice and help welcome!!!

  23. Wonderful post! We have attended Financial Peace University and have followed this system. It is empowering to budget, become debt free and live a more disciplined life….live like no other so one day you can live and give like no other…IS FREEDOM

    Thank you for sharing this info in a “condensed” form

    1. Michelle, thanks so much for sharing your own experience. I love to hear from other people who have had success with this budgeting system!

  24. So what about the miles I earn on my credit card? I only use my credit card for bills and pay it off every month. I would like to go completely cash but I like being able to see each transaction on my credit or debit cards. Do you keep receipts? Do you have to carry all of your money with you all the time? I worry I would lose it. Anyway those were all of my questions when reading your post. I’m interested in learning how this system can work in a 2015 world of credit.

    1. I don’t use credit, but that doesn’t mean that’s what you need to do. My husband and I used this system for 2 years until we paid off our mortgage and today we use a similar system except it’s exclusively a debit system that we track using a shared app on our phones called clear check book. I’ve had several people ask me about this so I will be sitting down with my husband soon to put that tutorial together. I kept receipts only for things that I might need to return. I only carried the money with me all the time that I might need while out and about. It’s just simply way to control your spending. I used to even pay cash for gas to keep that budget in order. Using a Cash only system takes planning. A better place for you to start Jay- to get all your ducks in a row is the Budget 101 post. You can use that system to set up your cash/debit transactions and decide where your money will go before you spend it. It walks you through the 3 parts of setting up and tracking a basic budget. https://thriftylittlemom.com/2014/02/21/budgeting-101-boss-your-money-around. I hope that helps. I also always recommend reading Dave Ramsey’s Total Money Makeover as an overall guide to how to start living a debt free life. I got my copy from the library.

  25. Hi! I have been trying to figure out a budgeting system that works for me and I have to say, you break things down so well! I do have one question: how do you determine your amount for each category (i.e, groceries, gas, eating out, etc.)? I am a college student (also in GA 🙂 and currently living with friends because of family issues. I am trying to get out on my own as quickly as possible but I think that before I try that I need to establish and maintain a strong budget! Any tips would be greatly appreciated.

    1. Marleigh, your categories are broken down by the cash you make and what you need to live. As a note, I’m not a financial adviser and this isn’t financial advice I’m just helping you understand what we do :). If you do what we do you can only spend what comes into your life. Print out my Budgeting 101 sheet https://thriftylittlemom.com/2014/02/21/budgeting-101-boss-your-money-around and sit down and think about every single expense you have on the sheet.

      Then figure out how much you actually bring in. If you are spending more than you bring in-in cash-each month- you need to get your expenses down. That may mean cutting out coffees or eating out or shopping. Some college students think that credit cards are the way to go because they can live however they want and then take care of it the day they land their job. In that case most college students have student loans, car loans and now credit card loans to pay off. Beware of this lifestyle because it will suck money from your pocket in interest FOR YEARS after you get of school. That’s why it’s great that you are considering the envelope system.

      The envelope system can help ensure that you don’t overspend and are mindful on your categories like gas, eating out, entertainment, groceries…. It has to start with you figuring out how much cash you have verses how much cash you are spending so I would start there. Once you figure that out, to have a real budget you need to get that down to where what you spend every month can be covered by the cash you make (not the limit on a credit card). That might require you to pick up some extra work or just spend less. Hope that helps. Let me know if you have anymore questions.

      1. Thank you so much! I will definitely be trying to figure these things out; I just have to buckle down and track every expense! AHH! Thank you again for all your help!

        1. Once you do it for a few months it will come naturally just like any habit. Let me know how it goes and if you have any questions along the way. You can also grab Dave Ramsey’s Total Money Makeover from the library and read it. I wish I had found that book when I was college. No telling where we would be to day if I had!

  26. i have to do something and I really think this is it! I was working like any day at the hospital in 2011 and fell out long story short I am fighting a hard battle with MS and had to quit my job. I had good credit and it took over two years to get my disability and my hubby working 90 hours a week to try and make it. Needless to say I went through savings and maxed out cards to the point we owe more than our bills. My credit is horrible and we really need a newer vehicle and our daughter is turning 16 in March. My thing is can you learn if you are in a bad bind like me because I really don’t want to file bankruptcy. Thank for your awesome post!

    1. Amanda, I highly recommend that you go to your local library and get Dave Ramsey’s book, The Total Money Makeover. If you read it and apply his debt “baby steps” you may be able to avoid bankruptcy. I would look into coaching from one his professionals: http://www.daveramsey.com/coaching/faq/. I hear people call in all the time to his show and he gives them sound advice on avoiding that step. I’m not a financial adviser so this is not financial advice -If I personally were in your situation, based on what you are saying, I would say that I would get my 16 year old daughter a job if she wants to drive, pay for gas and pay for her own insurance. I would NOT co-sign or buy her a new car. I would make my 16 year old work, save up the cash and then buy a used reliable car. There are lots of people clawing their way back from near bankruptcy and if you are willing to take Dave’s advice and apply it, you can probably get your finances back together in a few years. It’s never to late to learn. 🙂 Good luck! http://www.daveramsey.com/article/the-truth-about-bankruptcy/

  27. Hello. So anything left over stays in the bank? Vacations are only taken if you can pay for them with cash? It sounds like a great plan but a little nervous. 🙂

    1. Carrie, I think everyone is nervous the first time they do the cash only thing. Anything left over does stay in the bank. If you’re looking for a little more advanced system to add to the envelope idea, read through my Budgeting 101 post https://thriftylittlemom.com/2014/02/21/budgeting-101-boss-your-money-around and print out a monthly budget sheet. In reality when we do our own budget we “spend” our money til it’s gone in all the categories we need to fill each month from groceries to vacation. We track that so we always know hypothetically what is in our “car savings” or “vacation savings” even all that money is parked in the same account. If you want a simpler solution, I would just set up a “vacation” savings account and put what you have left over each month over into that if that’s what you want to do.

  28. My grandmother used this method. She always had money. My grandfather was the only one who worked. She had everything paid off, my grandfather got a new car every couple of years…he had A+++ credit. When they needed new appliances or did a remodel on the house, my grandmother had saved enough money to pay to have it done or purchased the item outright. They didn’t believe in credit. I had forgotten all this, until I saw this on Pinterest. I need to start doing this. I’m going to look into all the info that you listed and start this now. Thank you. I feel like my husband and I are going to be in a better place in just a few years!

    1. Donya, I find myself reflecting on some of the things my parents and grandparents did as well that were really smart. This system was the springboard to where we are now. It got this girl to focus and understand a budget in a clearly tangible way and then doing a budget on a spreadsheet later was so much easier! You can do this and if you will be diligent about it, you’re going to find that your life gets ways easier (at least in the financial zone). You can totally do this! Thanks for sharing your story.

  29. I have been using this same system for over 30 years, ever since I was divorced and had 2 young children and no money. I had to figure out how to survive on no money. I had no credit and my ex husband had bad credit so it kind of trailed along behind me for a while. I got a job and worked hard. I succeeded! Using this method and nothing else, I didn’t qualify for any of the state aid programs, I made $20.00 too much. So I worked and only bought what we needed. I bought a brand new, much needed car within 4 years of being divorced! No more beater cars for me and my children! Over 30 years later, I may not be rich, but, I am not penniless and I am happily remarried to a wonderful man who follows this budget with me. I tell people all the time how great this system is, too bad they don’t listen. 🙁

    1. Brenda, thank you for sharing your story! Wow! That takes a lot of courage and self discipline and you never gave up! One thing I’ve learned in my life is that the most you can do for people is pass along wisdom and if they don’t “buy in” themselves, they just flat won’t do it! Keep giving your wisdom though because one day it might just make sense to someone and change their financial future!

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