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6 Reasons People Argue Against Using Cash Envelopes — And Why I Don’t Buy Them


Guest post by Kristen from Getting More God

After following for a while and reading about the Cash Envelope System, my husband and I decided to take the plunge about a year ago. Our bank account was slowly dwindling, even though we had a budget that we tracked each dollar in. We figured being “cash only” was the best way to keep track of where these dollars were disappearing to.

I thought it would be painful, but it has actually been beautiful. We will never, ever go back!

Many of my friends and family think we are crazy for using envelopes and offer up the same concerns I had before taking the envelope plunge. I figured it would be quick and easy to get them all in one place and provide the answers I’ve found since beginning our “Life with Envelopes.”

Argument #1: “I don’t want to have all those restrictions! I want to enjoy my life!”

You determine the restrictions. You look at your income versus your bills and decide exactly how much money goes to each category.

If you love to shop and want to spend $100 per month on clothes, so be it! That just means a little less is going to go to the other envelopes. It all depends on your decisions for where your money goes based on what your family needs and can afford.

Envelopes actually free you. You know things are covered and you no longer have such regret over purchases you weren’t prepared for!

Argument #2 – “I don’t know how much money to put into each envelope or what envelopes I even need!”

There are many great resources available with guides on just how to do this.

Argument #3 – “I do not want to go into the gas station every single week to pay cash for my gas. Headache!”

There are still things that we use our card for, and gas is definitely one of those. I would never ask you (or require myself!) to go inside and pay for gas every time. You’re right, it’s a headache!

Argument #4 – “I don’t want to have to tell my friends I can’t hang out because I just spent my last dollar in my envelope. I’m not an 8-year-old with an allowance!”

No, you’re not. But you could be a 35-year-old living at home with your parents if you don’t learn to manage your money well! So, my advice is to look at your month when it starts. Knowing how much money you have for eating out, entertainment, etc. and then decide which weekends you will use it.

If your friends ask to hang out on a certain weekend where you know you’ll be strapped for cash, recommend another weekend or ask if you can hang out at a certain venue you know you can afford. You initiate the invites and then things are much more within your control. And if you find that you are constantly restricted by your envelope, you may need to adjust amounts.

Argument #5 – “That seems annoying to have to actually go into the bank and get cash out every month. I don’t have time for that.”

I say this when it comes to exercise, too… You have the same 24 hours in your day that everyone else has. You make time for the things that matter to you.

Look at what you spend your time doing. You can’t deny that those are the things that matter to you, or else you wouldn’t occupy yourself with them. So decide to make your financial health matter to you and get to the bank once a month! It’ll take 10 minutes! Financial responsibility requires some dedication and maturity.

Argument #6 – “I don’t want to use cash because I use and pay off my credit card each month. I get points/rewards for my purchases and I love that!”

If you are able to keep your finances 100% in check and not have money slipping through your fingers with that system, then more power to you! I’m not saying everyone must do the envelope system, or else you don’t care about stewarding your money well.

I’m simply asking that everyone consider it. Handing someone cold, hard cash is so much more difficult and meaningful than swiping a card and “giving” them this imaginary-feeling money. It doesn’t leave an impression at all. You can easily spend without even thinking about it.

You think twice — or even three times — when you hand someone your hard-earned cash. That’s the benefit. But if your “cushion” isn’t dwindling slowly and you are fine with your system, no need to change!

Ultimately, do what works for your family. Using cash envelopes has completely changed our family (for the better!). They might not work for you, but you’ll never know until you try. Thank you to Money Saving Mom® for introducing this to us.

Kristen is 27-year-old mother of one happy toddler and wife of one great man. She has many earthly passions which she attempts to use to stir her affections for Christ on her blog, She hopes to see His hand in all of the passions He’s given her here on Earth. She wants everything to point back to Him. That’s the challenge, and she writes about the process of discovering it! 

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  • One thing I haven’t noticed anyone remarking on is the simplicity of working with cash. We started using cash envelopes for “groceries” and “gas” just last month. I balance our checkbook and on-line bank account, and immediately noticed how much fewer transactions I had to record, and how much less room for error there was. The month of May only took up a half-page in my checkbook instead of two pages.

    Something else we did in our first “cash” month was we dumped all of our spare change into a jar to sponsor kids going to a Christian summer camp. Our money is always tight, so it was fun to watch the change grow in the jar and know that money would help the kids we love!

    • K* says:

      I tought it was so much harder to use envelopes than credit cards! I like and seeing what I’ve spent on certain things.

  • I was one of those people who loved my credit card especially the rewards. We always paid our bill in full and some months we were even able to save a couple of hundred dollars so I never thought to change our budget system. We decided to start a cash system as a trial for one year in January to see if it really impacted our budget and 5 months in it totally has.

    In the past, there were so many times I would run to CVS or Target for one or two things and end up with a cart of stuff that I charged. Now I still go to these stores, but i am much more aware of what’s in my cart, and typically I come in way under on the bill than the cash I have on me. By switching to cash we are saving steadily every single month!

  • Deesselisa says:

    I don’t even buy the one for gas. I don’t see how long it takes to go in and pay for gas or why that is a pain. But this is. We don’t have a credit card. We once did, it doesn’t work for us at all, so now they are long gone. We do have a debit card we don’t often use. But we were going on vacation and didn’t want to carry so much cash in the envelope for the hotel and food etc. So we deposited the cash savings vacation fund. We filled up with gas and drove off to our destination. The gas pump had been modified by thieves so they could steal my debit card number. While we were driving, they racked up transactions in Dubai and South America somewhere. So the bank shut off my debit card. I didn’t need to buy anything until dinner time at which point it was too late to call and find out why it was denied. I had to write a check. I found out the next morning what was wrong. As it was a debit card, not credit, we could not even get our money back until we got home and filled out paper work at our bank and wait for it to be reviewed. We luckily had a small amount of cash from our other envelopes (we even had to borrow from the kids to have gas money to drive home with.) But we had a hard time explaining to the hotel which doesn’t usually take checks, why that was all we could give them. Not a fun experience. Lesson learned: Take the Cash! And Pay with it at the Pump! Everytime!

    • jen says:

      wow! that is a terrible experience you had to go through. i never heard of that happening at gas pumps till now.

    • Jennifer Ott says:

      I understand…but what did you do with small kids? I can’t leave all 4 in the car (hubby is deployed sometimes so I can’t go without them) in their carseats! And in the winter (we live in a cold climate), we remove jackets in the van to securely fasten their buckles, so it would be a huge hassle… Having done lots of international traveling, we always call our debit card company ahead of time to let them know about our plans and unusual spending that might be showing up.

      • Brooke says:

        Yes, with small children going inside and waiting in line to pay for gas would be the ultimate time waster. Also we get our gas at Costco which here is much cheaper but only takes a debit or Amex, not cash. I wouldn’t pay more for gas just to use cash somewhere else! Unlike groceries or Target trips, I get the same amount of gas every week. So we still use a debit card for that one.

        But I loved this article because I’ve heard all the excuses and used them all at times too, but since we switched to cash we are saving $1,000 a month more than we were previously!

        • Barbara Lewis says:

          One tip – I take the cash envelope budgeted for gas into costco when I go in to shop for groceries I buy there. I get a costco gift card with gas money and use that at the pump instead of a debt card.

          We have been using envelopes for several years and love it!

      • Ashley M says:

        We went to the cash envelope system almost a year ago and the gas envelope was always such a hassle. I didn’t mind paying the station attendant, but my husband hated the inconvenience. We get gas through our grocery store (a Kroger affiliate), so I got a reloadable gift card. It works for groceries and gas. Now, I just take what we budget for gas with me to the store and load the gift card while I check out with groceries. It’s a win-win. We are still using cash and my hubby can pay at the pump with a gift card. Problem solved.

        • Rhonda says:

          We do the same thing with Walmart gift cards. We save 3¢/gallon & at some times during the year it is more. It’s not a huge savings, but that way I don’t have to use my debit card at the pump or go in & pay cash.

    • Emily says:

      If your bank didn’t catch that unusual activity and contact you immediately, then I think you need a new bank! Ideally, the bank or credit card company should be monitoring accounts for suspicious/abnormal activity.

      I’ve had a debit card # stolen once and we had our credit card # hacked once and both times, the bank or credit card co. froze our accounts and contacted us immediately. We had a new card within days!

    • Kristen says:

      Horrible! My debit card got stolen years ago and was a hassle to work with the bank. My credit card got stolen four times this year. The difference was the credit card called me immediately all four times, but I had to call the bank. I had less than 100 charged on the credit card, but the debit card theives wiped out my bank account in minutes. I will never use my debit card. I cut them as soon as the bank gives me a new one as the old expires.

    • Ginger says:

      Or use a credit card so it can be fixed in two days, and always have a back up account?

    • Janet says:

      Every few weeks my grocery store offers $10 off your bill when you purchase a $50 gas gift card, with a $50 purchase. I’ve gotten to where I can buy enough to get cards for the whole month,about $20, and $40 off my grocery bill. Even if your store doesn’t offer this type of discount, Gas cards work good in place of cash or using your debit.

  • NatPatBen says:

    When I was a single person, I managed my money just fine using credit cards. But when I got married to a man from another country who’d never had a credit card….. I soon learned that I made a HUGE mistake thinking he’d have the same credit card usage as I did. Switching to cash was definitely a great decision for us that eliminated a lot of frustration on both of our parts (well, at least mine).

  • jen says:

    i used the envelope system when i was in high school and had my very first job and bills. i divided my bills in 4 and then saved that much each week when i cashed my check. i kept the envelopes in my dresser and then took cash to pay the bills when they were due.

    now we don’t use the envelope system. we mostly use a credit card for all transactions in a month. in the last 2½ years, i have earned over $1,300 in cash from my credit card.

    i do use a money market for all of our big expenses. by “big” i mean property taxes / heating oil /christmas /all insurances. i divide these bills by 12 and transfer the $ monthly into our money market. i like having minimal bills to pay montlhy. i don’t like paying fees to pay bills monthly like insurance companies tack on. i keep track of how much is in our “escrow” account by using an account in microsoft money. we only have one money market account at the bank, but in our microsoft money escrow account we have 3 accounts. 1. escrow 2. car (i pretend we have a car payment now so when i need/want a car i can hopefully pay cash) 3. emergency reserves. my dh thinks my system is crazy, but he appreciates that i pay all the bills and we don’t have any debt but our mortgage. i realize this way takes a lot of upfront cash and would be difficult for some. since i started my adult life this way, it’s just what i know.

    i wish everyone luck on this journey of managing money!

  • Audrey says:

    I desperately want the envelope system to work for me. But I am so absent-minded. In the last few months, I have lost $450 when envelopes have gone missing. Not very frugal, plus it caused a big argument between me and my husband. 🙁 As much as I want to use the envelope system, it does not work for me.

    • Erin says:

      I’m with you, and I have the same problem with coupons. I keep them in an envelope but often by the time I get to the checkout stand some are missing (managing two toddlers through the store along with the groceries doesn’t help). Even though the envelope system sounds great (and is obviously working wonders for many out there!), it would be too risky for me to lose the money.

      I’m better off to just make a list and write the amount I have to spend on my credit card for the week. If I get to the register and the price is more than I planned, I ask the cashier to take something off so that the amount is under my budget. And I won’t complain about getting $50 transferred strait to my savings account every time those spent budgeted dollars add up.

      • Jennifer says:

        I didn’t want to mess with envelopes, so I bought a cheap coupon organizer at Dollar Tree and used the different sections as my “envelopes.” The system worked so well for me that when the first “envelope wallet” wore out I bought a nice pleather one I found on clearance.

    • Lynne says:

      I’m not from USA, so not sure if you have the same system as us, but we can use our EFTPOS card (not a credit card, but a card that takes it directly from your account using the money you have in it) – I have several bank accounts for different things, but I have my main account and my ‘food account’ linked to the card so I have already transferred my food allowance for the week to the food account (before I get groceries) … it may be easier than having to deal with cash if you’re not a cash kinda gal 🙂

  • Holly says:

    I use a modified version of this system just because I LOVE my credit card points/cashback rewards. I do budget $X in the gas, me, entertainment, groceries, other house……categories weekly or monthly.

    If/when I do pay by credit card I come home and move the actual cash to an envelope marked Charges. Then when the bill comes in I have the REAL cash to pay it off and I stay within my budget.

    • jo says:

      I do that too!!! And it’s worth the several hundred we get back each year from American Express. I usually pay on the CC several times a month. I do a bank transfer to the CC and use the cash to “pay” ourselves our weekly food/allowance etc. instead of going to the bank.

  • Kelly says:

    So I have not read 100% of the comments, but I have noticed the lack of debit card discussion. More just credits cards that are paid off each month or cash. We rarely ever use cash for anything and we never use traditional credit cards, but we budget as if we had cash envelopes. We use our debit card for everything. When we make a purchase with our debit card we choose credit and sign, it still deducts directly from our chekcing, however anytime we choose credit with a debit card purchase we get the reward points. There is nothing to pay off at the end of the month. We still figure out a budget for each category, gas, grocery, clothing, dining out, entertainment, vacation, household inprovements, etc. At the beginning of each month with sit down with a spreadsheet, enter our checking account balance, track our income and our bills and put into each budget category how much we have to spend for that month. When we shop, we scan our receipts with an app called Lemon. Each week we balance the spreadsheet using our online banking and the receipts from purchases. I always know exactly how much is left in the grocery budget when I go shopping. Once the funds are depleted there is no more swiping of the card. The only place we may allow an overage is gas, because we have to get to work!
    There are many benefits to doing things this way:
    No theft of cash
    Still get rewards points
    Purchases are protected
    Unauthorized purchases are protected!
    No credit card bill to pay off each month
    We still live to our budget amounts and can easily track everything we purchase through our online banking statements and our scanned receipts.
    Just wanted to put this out there as there are other options than just cash or paying off your credit cards!

  • Jen says:


    For people that really have a hard time giving up the cards and carrying cash (I am definately one of them!) I just found an app for Iphone and Android called “Easy Envelopes”. You can enter the amts you want to put in your different envelopes on the app and when you make purchases log them under the appropriate envelope on your phone and you can track your spending in each category through virtual envelopes. I just downloaded it so I haven’t tried it yet but looking forward to testing it out!!!

  • Alex says:

    The envelope system is more flexible than people think. Some of these problems can be solved by breaking the cash into smaller time periods. eg – #4I’m not an 8-year-old with an allowance, or i lost my envelope and a whole month’s of expenses.

    If you go through all your restaurant/entertainment budget in the first weekend of the month, break it up. Instead of a month’s worth of cash, maybe you only carry a weeks or days worth of cash. I know someone who budgets restaurant/entertainment daily Monday-Thursday, and by weekend. So instead of $500 for the month, they get $10 per day and $80 per weekend (give or take). Maybe he brings his lunch to work, and spends $0 Mon-Thurs. He then has $40 extra for a total of $120 that Friday or Saturday.

    Personally, I only carry restaurant/entertainment & gas on me. Groceries & clothing are only for intentional trips to the store so I bring it on that day only.

  • Rebecca Huff says:

    Very well written article. My one and only concern against the cash system is if I lose my wallet or it somehow gets stolen. There’s really no solution to that other than to be more responsible or carry less cash! With 6 children and a spouse that works an insane amount of hours, I can sometimes be a little scatter brained. But the idea of having fewer transactions to balance sounds so heavenly!
    I can honestly say using the “point and reward” credit card thing doesn’t work for us. Not only is it harder to stay in budget, but I can never shake the feeling that I am spending next month’s paycheck as opposed to spending last month’s pay check like all the gurus say you should. You know?
    Thanks for a great post!

  • Erin says:

    What does everyone do with all their change (the jingly change I mean) when using the envelope system? Do you all put it in a savings change jar or are you paying for things using all the change too.

    • CJ says:

      I put mine in the change pouch in my wallet, use it as necessary during the month and put whatever is left at the end of the month in our change jar.

  • Patti says:

    What is the big deal here…me and my husband ( I’m 56 he is 63) have been doing this for 7 years. He lost his big time job and we don’t have the money we use to have. He lost his job unexpectedly in 2008 and were left in credit card debt hell. So no credit cards anymore just cash and not enough. The younger generation was raised on debit cards we were not. I would suggest to those born after 1980…learn to carry cash in your wallet. Those that do are tired of covering your expenses when you can’t use your debit card. Buying on plastic almost feels like it’s free…start using cash.

  • Karen says:

    I have had a couple of home renovations in the past three years. I used a rewards credit card to pay for them, paid in full following the end of the billing cycle. That cash-back reward money paid for some “needs” we had been putting off.

    You are right, not everyone has the discipline to use a card, credit or debit, responsibly. But differences have their place.

  • We have mostly stopped using “physical” envelopes. I have a cash purse and we keep all the fluid cash for the month in that (minus my husband’s gas money and spending cash). I found I would loose envelopes. They would waste away into trash, we’d have to buy an item on line and then all would become one pile anyway when I didn’t have the exact change to make the envelopes right again, and lastly if you needed to overspend in one place then it just came from one of the other envelopes anyway. My husband fought for years doing the “envelope method” but we have found a balance that is working for us. We keep a record of what cash was spend and on what and when we put it into the computer we can see where and what we spend that money on. We still designate x for each item and often I put stickies on the cash if it is for something specific, I’ve thought about getting a coupon carrier to have the slots.

  • Paula Horstmann says:

    I use a hobo wallet and cut “mini folders” out card stock to fit in the cash section of the wallet. Then I break my month up into 2 week sessions. I have food, fun and odds folders. I realized I was messing up on food the most so I made another folder and broke it up into a week each. So now I have 4 folders, food-week 1, odds, fun, food-week 2.

    The odds is my “throw down” money for my wants (coffee, lipstick) and my mess ups (If I screw up then it comes out of this folder). The fun folder is for anything fun we want to do in two weeks. Sometimes our fun money is spent going to a movie, sometimes it’s a special dinner out and sometimes it’s an ice cream treat. We have guilt free fun and my kids know to check the “fun money” to see what we can afford. This plan is not for everyone but works well for us. The biggest advice I can give is to try it and problem solve through your issues and concerns. I still use my debt card as credit for gas and I keep clothing and sinking fund envelopes at home. These are regular postal envelopes with a hand written category on them. My sinking fund envelope is for oil changes, car washes, bi annual car insurance, basically things that sneak up on me and ruin my monthly budget. Every two weeks, I put a small amount of cash in these to find them.

    Hope this helps.

  • Paula says:

    I use a hobo wallet and cut “mini folders” out card stock to fit in the cash section of the wallet. Then I break my month up into 2 week sessions. I have food, fun and odds folders. I realized I was messing up on food the most so I made another folder and broke it up into a week each. So now I have 4 folders, food-week 1, odds, fun, food-week 2.

    The odds is my “throw down” money for my wants (coffee, lipstick) and my mess ups (If I screw up then it comes out of this folder). The fun folder is for anything fun we want to do in two weeks. Sometimes our fun money is spent going to a movie, sometimes it’s a special dinner out and sometimes it’s an ice cream treat. We have guilt free fun and my kids know to check the “fun money” to see what we can afford. This plan is not for everyone but works well for us. The biggest advice I can give is to try it and problem solve through your issues and concerns. I still use my debt card as credit for gas and I keep clothing and sinking fund envelopes at home. These are regular postal envelopes with a hand written category on them. My sinking fund envelope is for oil changes, car washes, bi annual car insurance, basically things that sneak up on me and ruin my monthly budget. Every two weeks, I put a small amount of cash in these to fund them.

    Hope this helps.

  • Ashley says:

    How does the cash envelope system work in a place like Walmart, where you would be purchasing from multiple categories? Do you split it up into separate transactions?

    • Tara says:

      This has always been my question as well. We did the envelope system before kids 10 years ago and it worked ok. But it took a lot of time to split things up afterward. Also, now we are purchasing much more online and use debit or Paypal. I feel like our society as a whole does more of their spending online. I feel like the envelope system is therefore more complicated than it would have been when I was growing up pre-technology, or if I was living in a tiny town with one grocery store and did not ever shop online. These days our money goes out in so many different ways and to so many different places! We are not in debt, but have been trying to track every penny to maintain a budget, and it is so time consuming and not clear cut that we are always behind and can never seem to reflect on the last month to set the next, which is the point. Receipts are all different and often you can’t tell what the abbreviations are, sometimes receipts don’t print, or they get washed in someone’s jeans pocket. We liked the idea of using envelopes and tracking every penny, but it was taking over our lives and still the numbers were not matching up! So we are trying to find a much more streamlined approach to tracking our purchases. I feel like Dave Ramsey needs to address how means of spending has changed even in the last 5-10 years since we implemented his systems.

  • Colleen says:

    I’m afraid i will lose them.

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