You must have heard of Dave Ramsey’s cash envelope system. Well great! These cash envelope categories will save you! You’re about to get all of the most popular cash envelope categories so you can include these same ideas into your system.
The cash envelope system is a great tool to use to budget and save money! If you have problems sticking to a budget, overspending, or saving money in general, these cash envelope categories are sure to change your whole life!
This is no joke. Research shows that the cash envelope system cuts overspending, keeps you on track with your budget more than those who do not use this system, and enforces discipline with your money.
Let’s add some important cash envelope categories to your budget!
This post is all about cash envelope categories.
Cash Envelope Categories
What is the cash envelope system?
In a nutshell, the cash envelope system is a popular method to use as a means of budgeting and saving money.
The idea is to create a budget, get real envelopes, label each as one of your budget categories (i.e grocery envelope, gas, etc.), and stuff each envelope with real cash equal to the amount you’ve decided to set aside for each category.
How much should you put in each envelope?
How much goes into each envelope completely depends on your budget.
You can budget for the week or the month. Personally, it’s easier for me to budget for the whole month. As a full-time teacher who gets paid monthly, it’s better for me to withdraw my cash all at once and distribute it to the envelopes accordingly.
Do you have to use actual cash?
You actually don’t have to use actual cash. The whole point of this system though is to make this stuff physical. It’s much harder to hand over a hundred-dollar bill than it is to swipe a debit or credit card. It’s all psychological.
You can keep your money in your bank account and budget accordingly if you choose though.
If you choose to go this route, just make sure you have a way to keep track of your envelopes digitally.
There are a few categories I keep digital for my own convenience. For example, I keep the budget for gas digital. As a young woman, I personally hate walking into gas stations- especially at night.
I’ve been hit on way too many times in a scary, uncomfortable situation to where I’m just not going to go there. I’ll pay with my card during the day, thanks! In and out.
What if you run out of cash in the envelopes?
Well, that just means you’ve gone well beyond the money you accounted for. You went over your budget. DO NOT borrow money from another envelope or move everything around to adjust for an expense.
The only way this would be acceptable is if you were in an emergency situation and you needed more money. That’s it. Emergency situations. Buying a new purse is not an emergency situation…
How often should you refill the envelopes?
It’s best to stick with a monthly budget and add more funds to your envelopes when you get paid. If you get paid once a month, refill your envelopes once a month.
If you get paid weekly or bi-weekly, stick to your budget and stuff your envelopes when you get money. Need some advice on what to do if you get paid weekly or bi-weekly with your budget?
Read on: How to Create a Budget and Save
What if you have money left in your envelopes at the end of the month?
If you have money left over at the end of the money, clap for yourself! You can use this extra money to treat yourself, but USE CAUTION! Do not end up in debt or borrowing money from somewhere else.
When I get to the end of the month with money left over, I take out the extra and put it towards a savings account or debt.
Another suggestion would be to simply roll the money over to the next month and have extra money in that category.
I do that mostly for my shopping envelope and the ‘me’ envelope because items and prices from those categories are almost never the same month to month.
Cash Envelope Categories:
- Groceries
- Restaurants
- Gas
- Medicine/Pharmacy
- Hair Care/Beauty
- Car Maintenance
- Personal (Label this envelope as your name)
- Entertainment
- Gifts
- Household Supplies
- Holidays (Christmas)
- Self-Care
- Miscellaneous
I also have two envelopes labeled as my savings challenges I’m doing this year.
Read on: The Easiest Money-Saving Challenges You Need to Try
In closing,
I hope you were able to grab a few cash envelope category ideas. Make envelopes that fit your money needs. Do what’s best for you always.
Leave a comment below if you use cash envelopes too! If so, which categories are you using that I may be forgetting about?
This post was all about cash envelope categories.
