Family Finances ~ The Cash Envelope System

As part of our plan to simplify our life, we have begun a new finance system for our family.  We are very lucky to have learnt long ago to not use credit cards for daily spending or bill paying.  We primarily use debit cards for daily spending and a combination of direct debit or Bpay for our bills.  This system was working but we really felt like we could do better!  

I thought about a time when I was really good at budgeting, saving and not impulse buying.  I remembered that when I had my first job I was paid in cash.  Those hard earned dollars were given to me in a little yellow envelope with the payment details on the front.  There was something about handing over cash when paying for something, that really made me double think about what I was buying.  Looking in that little envelope to see how much cash was left was a great way of keeping my spending in check!  Once the money was gone it was gone!

With this in mind I started researching budgeting systems that involved the use of cash.  I found the Dave Ramsey – Cash Envelope System.  On his site he said exactly what I was thinking, well actually what I was experiencing.

“There’s something psychological about spending cash that hurts more than swiping a piece of plastic.”

This was us.  So we started to set up the system.  With the right tools it was SIMPLE!

I ordered this gorgeous Cash Envelope Wallet from etsy.  Inside it is divided by plastic cards into 6 categories or envelopes.  You simply label each “envelope” with a category for spending.
You need to work out the following things.

  1. What will your “payment” cycle be. Weekly, Monthly, Fortnightly?  
  2. What are your regular costs? Put them into categories.  For us we have Groceries, Petrol, TakeAway (coffee, snacks at shops etc) Home (decorating etc)
  3. What will you budget for each category.  Be HARSH.  We have only budgeted the absolute minimum.  I am determined to save.
You can now set the system up!
Later this week I will share with you how the system works, some other Do’s and Dont’s of using the Cash System and check in with how we are going!
Do you use cash?



  1. LOVE IT! Thank you! I have been pondering on this for some time…not to instigate. ps ADORE the yellow chevron! x

  2. oops sorry…NOW to instigate x

  3. I love this idea and will be keeping it in mind for the future when we sell our business and have a simpler financial life. At the moment with the set up of our home loan it is better for me to do all my budgeted spending on the credit card. All my pay goes into an offset account so it is beneficial to leave as much as possible in there saving interest off the loan then pay off the credit card in full when payment is due so no interest is paid on the card. The key to this is sticking to your budget so you never have to pay interest on the card otherwise you loose more than you gain but it works for us.

  4. In Japan, everything is cash-based. You can’t rely on being able to pay by card. I think the only thing we really use card for now is groceries, and even then that’s only if we haven’t got enough cash on us. It’s so disconcerting adjusting to carrying so much cash around! But it does work. Knowing that this cash is IT and needs to last until X and needs to cover A, B and C. I mean, I do have an Aussie credit card on me still for emergencies, but that won’t work for the bus or train to get home if I’m stuck!

  5. Oh, it makes me happy to see my wallets all set up and know that they’re being used! So glad you like it. Thank you for the shout-out. 🙂

  6. I have looked at these wallets for a while, but can’t seem to figure out what to do with the many separate sections of coins. Being paid monthly is a pain. Still playing around with it. Good luck.

  7. I would love to implement this system as I think it is the only way we can truly direct our money. One burning question I have though:
    How does everyone get their partners on the “same page”?

  8. I love the envelope system. I have used it ever since my first job as a teenager as I got paid cash. I loved knowing how much was in each envelope and even if I had to put a mere $2.50 in a particular one each week , I would.
    I love the chevron yellow, I think we may be channelling each other with our new fondness for yellow and grey!!

  9. Because the admin of this web page is working, no uncertainty very quickly it will be well-known, due to its
    quality contents.

  10. Why am I only just reading this post now!?! What a great idea…I mean, I’ve heard of the cash envelope system before, but that etsy seller has taken it to the next level! Off to investigate…I think I could make that work.

  11. Wow, why have I never thought of doing something like this? I’ve always budgeted by categories and tracked our expenditure by categories, but every month, we also tend to over-spend. Something like this would really help!
    Ronnie xo

  12. I have JUST discussed this my husband and it’s a GO.
    Thanks so much for sharing this…
    Ronnie xo

  13. Thanks for the great post, I’m thinking I might give this a go! Just wondering how it is going for you and if it’s been a success?

Speak Your Mind