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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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  • Marie says:

    I totally agree!!! We have used envelopes for 8 years! I honestly don’t care if I get looks because “those” people aren’t in charge of MY finances. We have learned how to navigate stores like Walmart and Target with our envelopes and the different catagories. It may not be as easy as swiping a card but the reward is knowing I’m not putting my family’s financial security in jeapardy.
    As far as friends go I do exactly as the writer suggests. If I know I’m low on funds I either decline, suggest a different place or date, use my own allowance or get creative. If they are going for coffee I will either join them for conversation and not drink or bring a water bottle or something else along. This way I’m able to still enjoy my friends and not blow the budget. If you weren’t comfortable with this you could maybe suggest meeting at a park or something so your friends could still get their coffee and meet you.
    For instance today I’m meeting a friend for coffee but I really don’t want to spend the money. So I have two free coupons for Cherry Berry Chiller’s and will see if she wants to do this and go to a park to chat!
    I find most of my friends to be very supportive. And for those who aren’t or are critical of your budgeting them maybe you should reevaluate those relationships.

  • Jessica says:

    I want to know how people deal with theft of cash. There are more protections for other types of monetary theft but if you lose your envelope, even if someone wanted to return it there’s not going to be a way unless you put your name and contact info on it, which seems like a dangerous thing to do.

    • Kim says:

      I am concerned about theft, too! My friend recently had her car broken into and purse stolen while at the park on a nature walk with her kids. She uses mostly cash, so her money for the month was gone! Now she and her husband are discussing going back to using plastic more.

      I’m sure getting your purse/wallet stolen is rare, but it does happen. We live in a pretty safe area, but I have heard of several moms targeted for theft at parks, when you usually leave your purse behind to be free to chase your kids. I also know two people that had their purses stolen at Walmart. I try to take as many precautions as I can. I hide my purse if I have to leave it in the car, and I use the child seat buckle in the grocery basket to strap my purse in so it can’t be snatched easily (unless my little one is with me and using the seat belt).

      If your money is stolen, it can be quite a blow to your frugal system. 🙁

      • Kim says:

        BTW, we don’t use the cash system. My husband is not on board with it, and I have concerns about theft. We may try it someday, but haven’t tried it yet.

      • Brooke says:

        Anyone who is keeping their entire month’s worth of cash in their purse is not really thinking wisely. 🙂 We only take out two weeks of cash at a time and then it stays in a secure place in our home until needed. I only take approximately what I think I might need for that trip. The most I’ve ever lost (which was totally my fault) was $30 which sucked but the money we’ve saved has been hundreds of times that one mistake. The other great thing about only having what I need is that I can honestly say to my kids when they beg for a spontaneous fast food stop or something, “sorry I didn’t bring any money.” Of course I have a cc in my purse for emergencies but I don’t use it for everyday spending and it has curtailed so much of my excess!

    • Carissa says:

      We never take all our envelopes with us. A lot of what we budget for, we don’t need for everyday trips. I only carry my grocery, household, dining and misc. envelopes with me on a regular basis, and if you are still worried about losing that money, only take what you’ll need for that day or that week with you and keep the remainder in a separate envelope at home. A debit card is not protected the way a credit card is, so it isn’t the most secure thing either and if you lose an envelope, you don’t have to worry about making calls to cancel a card or changing your banking information. I do have a credit card with me in case of an emergency away from home, but never use it.

    • Beth says:

      This was a concern for me when I was in college/single. What I ended up doing was Larry Burkett’s system at the time (very similar to Dave Ramsey, but Larry Burkett was before Dave’s time). 😉 He was one of the first to do the cash envelope system- I used his envelope system, but instead of carrying the cash, I would put little lined slips of notebook paper in each envelope. It was kind of like accounting notebook paper- it had three columns- one was description, the other amount, and the third was the remaining balance in the envelope. At the beginning, I’d put in the description “Grocery- starting balance.” Then in the second column, I put the amount, then in the third, the running amount. So, if I made a purchase, I’d enter what it was, then how much in the second column, then what remained in the third.

      It was sort of labor intensive at the time but it helped me use the system without carrying all the cash. =) Now that I’m married, my husband and I use EEBA- an “electronic cash envelope system.” It’s an app on our smart phone that tracks all that we spend- we enter receipts and it deducts and lets us know the running total. If you’re really wanting to do the cash envelope system but don’t want to because you dont’ want to carry cash, or want to use credit cards for earning rewards, OR want something that works for multiple household users, I’d recommend looking into EEBA or EEBA doesn’t require any banking information, so we prefer it over It requires a little bit of practice to learn how to use the system well, but it is quite honestly the best thing we have found that works for our family. The website is 🙂 Anyway, that’s what we’ve done to deal with not wanting to carry a lot of cash and various issues. We also LOVE the reports on our spending habits that we can print out- helps us stay focused on our goals and see where we could be shaving off of our budget or if we need to adjust certain amounts. =)

      • kim c says:

        My hubby and I have talked about EBBA. We already use Quicken, but there is no app for that right now (other than which I don’t want to use). We had thought about using EBBA as our envelopes so that my hubby (who is often out of the loop because of work, I do the bills etc…we talk, but it is hard for him to keep track- I guess) would know what we have where and can make informed decisions without having to refer to me. Thoughts? Tips?

        • Beth says:

          That’s exactly why we did EEBA, Kim….it works really well but it took a month or so of figuring out how it worked and all of the little things that can be confusing. I wish I could just show it to you, it’s rather difficult to explain, but I honestly love it. The first month, my husband (who initially wanted to do it because, like your husband, he felt out of the loop on our finances) told me, “it’s going to be a little work for you to figure it out at first, but once you do, I think you’ll like it….give it time.” And he was right, it was a little work figuring every little thing, but after spending several nights sitting down and working on it together, I feel like we have it down finally. =) I would recommend the both of you go through it together and figure it out together, so that you both have a good understanding of it, rather than one person. It will help you in the long run since you have to sort of “visualize” these virtual envelopes and make entries in the right way so that it keeps things accurate. I really, really love it. We did end up signing up for the system that is like $3 a month- we wanted more envelopes, a longer tracking period to do charts, and the ability to link our accounts if we change our mind on that (ironically, that was one of the reasons we didn’t want to do mint on our phones). Not sure if we needed to do it or not, but it was nice to have more envelopes to divide things into smaller categories, but that depends. It really does track every little penny- so I’m sure we’ll get “off” at some point since you track all of your accounts (it tracks your credit card spending, then when you pay that, it shows that money being transferred from checking, etc.) I wish you were closer and I could just show you how it works for us- it’s a little hard to explain over email. 🙁 My biggest tip would be to give it a couple months before you get frustrated and it will be well worth it. =)

          But what you are saying- that is the EXACT reason we chose EEBA. Because we both have it on our phones, it syncs automatically after entries with the push of a button (so we both are aware where each envelope is as far as money left even though we are in two separate locations!!) When I pull up the app, it shows in graph form how much money I have left in each category. If I’m spending a lot and running low, it will recommend something like, “you’re 2.00 behind, stop spending for 3 days?” just to help you budget better, which I like.

          One thing I would recommend is tracking your spending for a few months prior to setting your amounts as it’s kind of a pain to switch everything if you are way off after your first month of trying it (adjusting categories, etc.) because you enter everything into this computer system. That’s probably the most tedius part- entering amounts and tracking is really simple. So wait to plug everything in until you have a pretty good handle on what you want your monthly envelopes to be so that you don’t have to go through and switch everything when you realize you’re way off on what you’ve allotted for groceries, for example. That’s what happened to us. =)

          I really wish we’d had this when he was traveling for work- it was so difficult at that time and we had no idea how to do a “cash” system being apart like that. It works really, really well for us. I am surprised there’s no app for quicken, though! Kinda weird.

          • kim c says:

            Thanks for the tips. I wish you could show me too since I much more of a visual person, but I will muddle through. 🙂 Quicken’s answer to the app is I recently answered a survey from them about an app they might have in the future, but nothing other than mint right now. I am going to chat with my hubby some more about EBBA. We both have had it bookmarked on our computers for a few months. I think now is a good time to get started since we are finishing some debt off, starting (hopefully) with some allowance for the kids and needing to make changes in the budget as a whole anyway. I really like that I can have the app synced between phones, but I don’t have to have account info.

      • Kim says:

        Thanks for sharing about EBBA! That sounds like something I’d love to look into. (:

    • Stefani says:

      If you always shop at the same store for groceries, you can put your monthly grocery allowance on a gift card for that store. You register the card, and then you’ll be able to report it lost/stolen. Once you’ve used up the card, it’s worthless until the next month when you add more. You’ll get a statement after each trip and/or online, so you can keep track of your balance. If not, you can always get a generic gift card for groceries, gas, etc. Otherwise, you have to be dilegent about protecting your money.

      • kate says:

        yes, i agree wholeheartedly about the grocery store gift cards! not necessarily for theft/security purposes, although that is a benefit. but they help me stick to my food budget, and help make sure that if i do run out of cash by the end of the month, i know there is still money left for food.

        i am also a big fan of iTunes gift cards. i download a lot of music and (inexpensive) apps, but i am afraid that if i put my credit card number into iTunes that i’ll accidentally run up a huge bill because it’s so easy to just keep downloading. so i buy gift cards for myself which helps keep me in check – when the gift card is empty, no more downloading.

    • Jennie says:

      Wow!!! Thanks Beth and Stefani!! these are excellent tips!!!

    • I guess I rarely shop (once a week) and only carry what I will spend on that trip (i.e. grocery shopping = grocery envelope). I rarely carry more than about $40 on me, so I’m not worried about theft (I’m more worried about someone stealing my IDs than I am my money).

      Also, something to remember is this:
      If they steal your cash, that’s it. That’s all they get. If they get your checkbook, credit or debit card they can clean you out and then you have to deal with that before you get your money back. If your cash is gone, yes, you are out the cash. But that’s all you’re out and you don’t have to worry about your credit report, changing accounts, etc. It’s just a momentary pain rather than a long-term headache.


      • K* says:

        Actually, I had a credit card get stolen, and it wasn’t a big deal. The purchases were refunded instantly, and I had a new card within a week. If it was cash, it wouldn’t have been solved so easily, and I would have been out the money forever.

  • Jennifer Ott says:

    Great article! I don’t understand why people are so resistant to the cash system! I still use a debit card to pay for gas simply because I will not unbuckle 4 kids from carseats to take them in with me!

    • K* says:

      I travel to Philadelphia every day. I carry $10 or less for my own safety. I don’t want to get mugged or make myself a target for violence.

    • K* says:

      I should also say that the Dave Ramsey system didn’t really work for me, either. I think because someone once explained to me that if I got mugged carrying cash it would be fine, because the credit card companies are mugging me every month with their dastardly interest rates (that I am never charged, because we pay in full) because that’s what Dave said.

      That put me off to him forever, lol.

  • I love the cash system. I don’t use it for every aspect, but I do have a few envelopes going for various things. It really helps control spending in those areas.

  • Christine says:

    A different opinion – I think this sounds intriguing but husband does not want to do it so we use credit cards, like he wants to. We are debt free and have received probably over $1,000 worth of rewards, gift cards to Wal-Mart, gas stations, etc. We pay our credit card off every month. I realized we might not spend as much money doing the cash method, but I would rather honor my husband. I love reading about people that do this though. 🙂

    • Tara H says:

      You’re succeeding because you’re honoring your husband!! Good for you!! 🙂

    • Chelsea says:

      Mine feels the same way. We don’t always use our credit card, but we do have certain bills and gas that we pay with our credit card- which we always pay off every month.

      The funniest part about our situation is, my husband is a tipped employee, so he gets paid in cash! But he still prefers to deposit the money into the bank and use our debit and credit card instead. I’m okay with that. Especially since we don’t have any debt.

      Like you, I prefer to honor my husband on this. I have tried talking him into envelopes, and while he can see the logic in an area such as groceries, he has never had the desire to go all cash. But I love reading people’s success stories in this area, so keep ’em coming! 🙂

    • Amie says:

      I think it is fine to do the credit cards with rewards…especially if you are debt-free! I did that last year and earned hundreds in gift cards that we used for birthdays and Christmas. I applied for a credit card to get bonus travel points and was able to cash in those points for a 3 day weekend in Tybee Island for my husband’s birthday. I applied for another card and got a $50 credit. I don’t use those cards now since there are no longer good perks, but I see the value it them and I may consider another offer in the future. At this point, I am trying to talk my husband into the cash system so we can meet some financial goals.

    • Catherine says:

      Yes, another one here, honoring her husband by NOT using cash. There is one big advantage, though: when you use credit/debit cards, there’s a record of exactly where and when you spent the money. For someone like my husband (cash just slips through his fingers) it’s an easy way to see where exactly the money went.

      • Sarah says:

        I agree! It’s a huge convience factor for me to have a monthly summary.
        My credit card even itemizes everything for me so that at the end of each month I know how much I spent on groceries, gas, etc.

    • I just commented further down about how we switched over to the cash system, but wanted to say that it took 6 years of waiting for my husband to decide to try it, and up until the last month or so, we used credit cards and paid them off monthly as well.

      Good for you in honoring your husband! I think that wether cash or cards would work better in saving you money is truly secondary to honoring your husband, which makes it a wise move!

      • Beth says:

        Catherine- my husband was the same way! Good for you ladies in honoring your husbands- that will be a blessing in your marriage. =) I wasn’t as honoring to my husband and really pushed him to try it- we tried the cash envelope and it failed miserably for us. I wrote above about what we ended up doing (eeba) but he was the same way with letting cash slip through fingers too easily- as am I. That’s why I like EEBA, because it electronically shows me my spending habits and what I overspend on. It’s been eye-opening for me and challenging- and honestly, we are debt-free and I am a hard-core couponer who would consider herself quite frugal, so I was very surprised to see some of the reports!! (and embarrassed and challenged). 🙂

    • Meredith M says:

      How interested in it are you? Maybe he could honor you by agreeing to try it for 3 months.

  • Kelly S says:

    We just started using cash – we just have one envelope of “spending” money for the month that covers groceries, food, gifts, fun, etc. We still use a credit card/checks/automatic deposit for regular bills, gas, and offering. So far it’s been two months and it’s been great! We resisted for quite a while because of the things you mentioned above, especially the ease and rewards of using a credit card. However, we’ve discovered how easy and simple it is to use cash – it’s great when dining out with friends and we need to split the bill, and it makes us so much more conscious of what we’re spending!

    Thanks for the great post!

  • Stacey says:

    I know some people really love the cash system…good for you! I’m glad that it is helping you manage your finances and goals. 🙂

    For my husband and me, this system is not for us, and not for any of the arguments listed above. We simply have good self-control when it comes to managing our finances while using a credit card for most of our purchases. Every single month we are able to live below our means (debt free), give very generously, and still watch our saving accounts grow. I understand that not everyone has that kind of built in self-control, and so if a tool like using cash envelopes works well for you, GREAT!

    For some, one of the reasons cash does not work is that the idea of swiping a card is much harder to do than it is to hand over a few (or more) dollar bills. Money management is not a one-size-fits-all deal.

    Thank you for saying “Ultimately, do what works best for your family.” I get very weary of hearing/reading folks say “the cash envelope system is the best/only way to manage one’s spending” and implying that those who use credit cards are foolish, as that’s simply not true! It works for Crystal and many of her followers, but I am quite certain there are many like my husband and me who can manage (wisely, at that) our finances without the tool of using envelopes.

    • Kristin says:

      Agree! For me, I have tried both the envelope system and just using my debt card (I have no credit cards) and using the card is the best system for me. I always spend more when I am using cash compared to my debt card.

    • Sarah T. says:

      I understand what you mean. We have extremely good self-control as well… but also an extremely low budget. With my hubby taking doctoral classes, we pay as much for tuition as we do for our mortgage. So our cushion is non-existent. According to the numbers, we go back every month. However, after going to the cash system, I have really been able to make that lack of cushion stretch. I believe God is faithful when we are faithful, and he makes it work, even when it mathematically doesn’t, and it’s been neat to sit back for a front-row view of that stretching in progress. What I appreciate the most is planning the budget and then working hard to stick to it- I’m able to analyze throughout the month where I am in relation to how many days left and how many dollars. Before, even with my thriftiness and self-control, if I saw a good deal on toilet paper, I’d grab it so I didn’t miss the good price. Because I’d eventually need it and knew I wouldn’t have to buy it later. Now, I trust that there will be another deal, don’t worry about stockpiling, and work within the budget.

      • “I believe God is faithful when we are faithful, and he makes it work, even when it mathematically doesn’t, and it’s been neat to sit back for a front-row view of that stretching in progress.” –I agree! My husband is in youth ministry, and I stay home with our two toddlers. Every month we seem to spend everything we make and then some, but somehow God always comes through. Every bill gets paid, our debt is shrinking, and our savings are intact. God always provides. 🙂

    • Heather says:

      Agree. I wasn’t liking this article at first, but then the end saved it from being self-righteous.
      I do agree with most of those points, but in the end I don’t use the cash system because I simply just don’t feel like it! The benefits don’t outweigh the costs in time for me, for various reasons. And yeah, if I tried it, maybe I would like it. But I just don’t care enough to try.
      However, I do think it is a great way to go for many people.

    • Amy says:

      Totally agree! There is not a one size fits all solution. There are so many different families/circumstances out there and we each need to do what is best in our own lives!

    • BrandyU says:

      I agree with this wholeheartedly!

      We work with a budget but use our debit/credit cards instead of cash b/c it works better for us. I don’t find it “easier” to swipe a card at all when at the end of the day I’ll have to enter in the appropriate category. In the last 18 months we’ve managed to pay off my car, the motorcycle, buy a camper & cut 2+ years off of our mortgage. We don’t carry any debt (‘cept the mortgage) so what we are doing is obviously working for us!

    • ML says:

      I agree 100% percent with Stacey! Our family uses credit cards, we pay them off each month and enjoy using the points for free hotel stays. We are completely debt free (including our house). Do what works for you…

    • Amy says:

      I totally agree!

    • Carol says:

      I also agree with Stacey 100%

      • Lydia says:

        Agree! We are debt free and have a low budget…and last year we made over $1000/yr. in credit card perks. Def. worth it to us!

    • Sheila says:

      I have to say I agree with Stacey. We do NOT use the cash system, but none of those reasons applied to us. We’re not in the habit of impulse buys; we buy what we intended to buy when we went shopping. If it works for a family, good going! But we’re not in any trouble financially….even with a credit card.

    • K* says:

      THIS! I get very annoyed with the folks who keep commenting to say things like JUST TRY IT FOR ONE MONTH YOU’LL SEE THAT I AM RIGHT, and it’s frustrating because it’s much ahrder for us to track cash than credit cards.

      • Crystal says:

        If you haven’t tried it, you can’t truly bash it from a personal experience, though you can say “I don’t think it would work for us as we seem to spend more when we use cash than a card.” But, on the flipside, I personally can’t say “credit cards don’t work for me” because I’ve never had them either. 🙂

        • Stacey says:

          Thank you for acknowledging that you have never tried the credit card system. Several people have commented that they feel inferior when they read these cash only kinds of posts, and there is a reason for that…the use of credit cards has been bashed here, repeatedly. I’ll do my best to respect what works for many, but it would be nice to have what works for others respected as well. You do so much on this site to help many with finding ways to save money…it saddens me that people feel have been made to feel badly because they use credit cards in a stewardly and wise manner.

          • Crystal says:

            As I mentioned to another commentor, I try to present a wide variety of posts here to give you inspiration and ideas for being a better steward of your money. What I share and other guest posters share will not work for everyone. Not all of us are going to be able to (or want to) get rid of our dryer, or go vegan, or make refried beans from scratch (to name a few posts I’ve shared in the last year). If something doesn’t work for you, guiltlessly skip over it, okay?

            As I’ve said here before (and say in my book), I think there is a small portion of self-disciplined people who can use credit cards wisely. But if you haven’t developed self-control, they can be very dangerous.

            Because of this, I cannot, in good conscience, endorse or promote them. But even if I don’t feel comfortable using or promoting them, I totally love all of my friends and readers who do. 🙂

            And that’s why I’m happily allowing comments and dialogue from both sides here. I might not agree with all the conclusions, but a healthy, cordial dialogue on subjects can often be very thought-provoking and helpful.

            So thanks for chiming in — and I hope you know that you’re accepted and loved here, regardless of whether or not you use credit cards. And I think I’ve told you before that it sounds like you’re one of the small portion of people who is using them wisely — as do many of the other commentors here.

            At the end of the day, what matters most is financial stewardship and self-discipline — not whether or not you swipe a card.

  • Blythe says:

    I am argument #6 all the way! and it does work for us…. and actually it does hurt when i swipe sometimes… makes it easier to return when i change my mind or something doesn’t work… Actually I feel it so much that to me its like i buy stuff twice when i swipe and when i pay the credit card. I know this doesn’t work for many but does for us. and the rewards are a nice bonus.

    • Becky says:

      I have to agree that for me, swiping is more painful than using cash – so that is what I do. The way I track my spending, I feel the purchase several times when I use my debit/credit cards. Once when I make the initial purchase, again when I enter that purchase into my spending log, and a final time when I either balance my checkbook (debit) or pay the bill (credit)!! I completely get that each person’s brain works differently; and for me, my system makes me very aware of how each swipe fits into my budget.

  • Natasha says:

    We started the cash system as well a few months ago and will never go back! The only thing that gets taken out of the checking is my automatic insurance payment on the same date every month. We don’t even use checks for bills- strictly money orders at .60/order. I’d rather pay that than a $30 NSF if we ever happened to forget to deduct a check from the checkbook register(it’s happened a few times in the past and it hasn’t happened for quite some time!) We love cash only!

    • Courtney says:

      We use duplicate checks for that exact reason (forgetting to write them down!). It costs a bit more for the checks, but it is so worth it to be able to see every check that was written!

  • OH, this is fantastic 😉 🙂 I am completely credit card debit free 🙂 🙂 I do use a debit card for purchases, but I would like to try the envelope system. I’m definitely going to check out that link for how to do that.

    Oh, and I read the part about paying for gas with cash. It might be inconvenient, but let me tell you something that of your readers might not know. Some gas stations will and do have the right to take out as much as $100 pre-authorization or whatever it’s called from your credit card, till the transaction hard posts. For example, a friend purchased about $10 worth of gas, but noticed there was $50 missing from her account. Gas stations can and do do that, to make sure there is enough money to pay for the purchase. Then when the transaction actually hard posts, it posts for just the purchase amount…in this case, for my friend, it was around $10…

    So I’d much rather have the inconvenience of walking a few steps to pay for my gas purchase with cash, then to have something like the above happen to me. That’s a HUGE inconvenience.

    Love and hugs from the ocean shores of California, Heather 🙂

    • Chelsea says:

      Although I don’t do this, I’ve heard that you can purchase gift cards (with cash) to the gas station you purchase gas from. You can then use that gift card on gas, so you are still essentially using cash, but you don’t have to go inside to pay each time. If you do decide to go with the envelope system, it might be something to consider. 🙂 Congrats on being credit card debt free!

    • BethB says:

      That’s why we use credit cards for gas or car rentals (we have one car and need to rent a few times a year). I respect the anti-credit card stance Crystal and many people take but my logic is to use it for purchases we are unlikely to overspend. I’m not going to make an impulse purchase of gas or a rental car we don’t need. Ha ha.

      • Heather says:

        Good point!

      • Emily says:

        I like that thought, BethB! The thought of a rental car company or some place tying up hundreds of dollars on my debit card is scary.

        And I’ve never heard of any place (gas station or otherwise) taking out more than authorized on a credit card.

    • Jennifer Ott says:

      One other opinions on the “gas” thing. We pay with a debit card, always have, always will…for a few more years. My children (4 of them) are all in car seats and I am often on my own (deployed hubby). We live in a cold state. I have to drive frequently. It’s worth it to me not to unbuckle all of them, drag them in the station, and pay for gas. I know there are places where you can probably pay at a window, but not here.

  • Great guest post!! I have considered doing the cash envelope system for groceries, but I’m very strict on our food budgeting and have decided to use a credit card instead that gives us cash back for our student loans (we pay it off each month). It does take more discipline this way, when swiping instead of handing over cash, but my hubby and I have been making it work by staying focused on our financial goals and eliminating excess spending on food (and the rest of our budgeting categories, too)! Thanks, MSM, for all your insights and help in this area!

  • Katie says:

    We do the cash system except for gas, which we do use our debit cards for. I would be fine paying for gas in cash, but I don’t actually pump my own gas, my husband does it for me. He says he is not going inside to pay for gas each time, and I’m not going to argue that. Plus the station closest to his work is pretty rough, so the quicker he can get in and out, the better!

    Now, if only I could find something to use other than boring, ugly old envelopes…anybody store their cash in something pretty? 🙂

    • Tracy says:

      I got an enevelope “book” off of Etsy. Go on Etsy and search for Laura Cole – Timeless Journey. She makes some really cute envelope books. They do cost around $15.

    • Amanda H. says:

      Do a Google search for Etsy envelope system and a bunch of different options will come up for cute ones. They are a little pricey though….

    • Andrea says:

      I made my own envelopes using pretty paper 🙂
      every envelope has a different color/design, so its easy to tell them apart

    • Heather says:

      Katie- I have a Savvycents wallet. It’s designed specifically for the cash system. It’s so nice that my sister thought it was an expensive designer wallet! It was a great value at $25. I’ve had mine two years and it still looks like new. It comes in several colors.

      Here is more about my experience with it-

  • We have started slowly switching over to the cash system, and my husband has had every single concern listed up there! We decided to switch it over a little at a time, to avoid becoming overwhelmed and make it something we can stick with. This past month, we have been doing all food – groceries and dining out – on cash, and we just take it out every 2 weeks when he gets paid. Pretty soon we will switch over the rest of the categories. It takes a little more effort, but honestly, we have already seen the results!

    I thought we were pretty frugal before, but it’s been forcing us to be more intentional. It also has become a game for me – how much money can I have left over at the end of each pay period to save for bulk purchases? (the answer is: more than I thought!) Even my husband, who had so many reservations, has been happy with the results.

  • Angie W. says:

    I’m in the exact same spot. Husband doesn’t want to in spite of my representations and we do pay off our cards every month and we have no debt but the mortage, which we are working on. I can get feeling bad that I’m not doing what works so well for everyone else but that is just the comparison trap. Thank you to all out there who recognize someone can value being frugal and yet not use the cash system–good as I believe it to be. :).

    • K* says:

      Don’t feel so bad about it! Honestly, it doesn’t work for everyone. For us, credit cards are perfect. We’ve had debit cards stolen, and I don’t like cash because that can also get stolen and is harder to keep track of, in my experience.

      We also love traveling, and we have a miles card that we pay in full.

  • Christine says:

    I have used envelopes for cash occasionally. It does help us curb spending, but I am wondering what you do when you go to somewhere like Target and buy from multiple categories? Or you send your husband somewhere after work for diapers or bananas or ? And what are your categories? Thanks!

    • Vanessa says:

      I would love to know the same thing! We tried the cash envelope system last fall and it was a complete flop because 1) I do most of my shopping at stores like Target & Meijer so keeping categories straight on the same purchase was nearly impossible and 2) my husband could never stop and pick something up.
      The only debt we currently have is our mortgage. We have a credit card that earns rewards and I track all of our purchases and we pay it off each month. I also keep a daily expenses budget each month. I just quit my job so we’re going to one income (and my husband is a teacher, so he doesn’t make much!), so I’ve been considering trying the cash system again, but need some suggestions on how to make it work better. Any help?

      • Stacey says:

        I honestly don’t think you need to feel pressured to use the cash envelope system if you’re using credit cards wisely, unless you really feel you need help with self control for your spending. You said you already are debt free and track your spending….instead of suggestions for how to make the envelope system work better, perhaps just tweak what is already working for you! A previous poster using the cash only system said something along the lines of God being faithful and providing for all of our needs. I totally agree! But I do NOT think that his faithfulness and providence is only limited to those who use Dave Ramsey’s method of cash envelopes. If the envelope system was a flop for you, don’t do it…just be faithful in your good habits and remember that HE is faithful, too! Best to you with your new adventure in living on one income! 🙂

        • K* says:

          This is a great comment, and thank you for saying it! I think there is a bit too much reverence to Dave Ramsey as the only way to do finances properly when his methods don’t work for all families. I think his way works for a lot of people, and that’s great, but not everyone.

          • jessica says:

            We are really similar to you. We do have a budget in an excel spreadsheet. What we are doing is working for us, so I don’t think we’ll change it. The cash system intrigues me. I think if we ever found ourselves in an unexpected financial emergency (job loss etc…) maybe we would try it.

        • Crystal says:

          Just to clarify: I’m pretty sure Dave didn’t invent the cash envelope system; he just popularized it. I used pretty much cash only long before I’d heard of Dave Ramsey. Yes, I’m weird like that. 🙂

          Oh and I definitely agree with you that God’s providence is not limited to one method of money management. If it were, the Bible would have told us how to use cash envelopes or credit cards or something else specific. 😉

          • Stacey says:

            Yep, I’m old enough to know that and realize he shouldn’t get the credit (many people used cash only well before either of us were even born and before credit cards became popularized!), but DR who most of your readers attribute it to. 😉

      • Lisa says:

        I don’t use the cash envelopes system, but I do use an excel spreadsheet. The spreadheet has all of the budget categories and separate tabs for each category. I list the store, date and original amount of receipt and then breakdown the purchase into the separate categories tab. This allows me to see where I spent my money. When I pay my credit card, I deduct the amount from the spreadsheet that has the balance of each category and transfer the money to my checking account.

  • Amber says:

    I want to use the envelope system because I do the majority of the shopping for groceries, clothes & baby items, etc. BUT my husband doesnt want to- because that would mean HE has to go to the bank (ATM) and get the cash for me and he doesnt want (wont) do that, so we haven’t been able to try. However, the one thing I am concerned about when trying to use cash for everything (and something I dont think you mentioned), is HOW do we start using cash for everything when we dont have enough money left over after all our bills (necessaties, not extras) are paid? We are on an almost $0 food budget since due to economic and other difficulties my husband is the only one working right now and we have 2 young children (2 year old & 3 week old) that actually need to eat more than PB sandwiches everyday, and need diapers, wipes, dr. visits, etc. . So we have to use our credit cards (yes, we have 2) to help cover food and other expenses that pop up unexpectedly when we run out of money. It just seems impossible to start something like this when you’re already running in the red before you even get to the “extras” part of your income.

    • Sarah says:


      I too had this same problem when we started . I started with only putting $45.00 on the credit card each month for groceries , if I needed more , I would go to a food pantry, sell an item from our home , or do some extra side work to find the cash. Before I new it (actually 3 years we had paid off $21K in credit card debt and work only on a cash system) so start small you will make it!

    • Check out sites like The Prudent Homemaker to help give you ideas of how to feed your family more frugally. Even though we certainly don’t do everything she does (we live in MN and can’t garden year-round), it’s been a huge help for our family!

      Also, have you thought about using things like Swagbucks to get diapers, etc. from Amazon without having to pay much out of pocket?

      Prayers for you and your family as you move foward on your journey,

    • Stacey says:

      With two young children, have you checked into help like WIC, etc? If you truly are spending your income wisely (necessities only, ie no cable, reduce use of utilities as much as possible to lower those bills, etc.) it is not wrong to ask for help. Are you connected to a church? The deacons of your church may be able to help you through a tough financial time as well.

    • Brooke says:

      Why is it that your husband has to go to the ATM to get money? Couldn’t you? Our bank even has a drive thru ATM so it’s easy for me to get out my cash even with my kids in the car.

  • Jill says:

    I agree with Jessica’s concern about theft. That is one of my biggest reservations about the envelope system. I have been broken into several times over the course of my life and it makes me nervous having cash around the house, even if it’s hidden.

    The last time I was hit, I had $600 cash stolen when I thought it was hidden well. I had been saving up to have my car repaired and that break-in dashed any hopes of that happening.

    The envelope system seems like a good idea, but I just don’t know that I can have money around the house that can be taken if someone were to break in.

    This is a good article that addresses a lot of reservation people have against this system, but it doesn’t address the concern of theft. Any comments on that subject that might put my mind at ease?

    • Lynn says:

      I used to work for an insurance company and this was a problem – your Homeowners/Renters policies limit the amount of coverage you have for cash (although most companies will increase it by paid endorsement) – in the states I handled it was usually about $200. That was the most you could be reimbursed for cash (without getting too technical we did used to try to find ways to help “absorb” this loss in other places). So this has always been a concern of mine.

      We used envelopes only for a few things – groceries, recreation, dining out (plus a small amount of weekly personal money)- as these were the three categories where I felt we could improve, we don’t really have any other debt. So, our solution is we take out money weekly and my bank atm (we are military) is right next to my commissary so I take our cash out and immediately go to the grocery store. That’s the largest part of our cash. We never save large amounts in our house we would rather earn a little interest in savings than nothing in my house anyway. I don’t really end up walking around then with a huge amount of cash. I know a lot of people like to withdraw monthly money, but this works well for us and helps me not be concerned about large amounts of cash around.

  • Becca says:

    So I guess we’re doing something of a hybrid of the envelope system… As we are in the military and are banking with a bank that has very few actual banks doing everything in cash is a giant headache… So I found an app for my phone. It lets you set up envelopes and how much money goes in each one. It’s nice because I can track exactly how much I spend and where. And it syncs with the hubby’s phone! 🙂 It works for us…

    • Andrea says:

      We have a similar problem. Our bank has two branches and only one of those actually deals with cash (and it’s close to a two-hour drive from our house). The closest ATM is 15 minutes from our house.

      We have a daily ATM withdrawal limit that can’t be increased, so getting cash for our monthly expenses would take multiple trips to an ATM.

  • Coby says:

    We have started doing the envelope system…the problem is my husband just uses the card when his cash is gone. How do you convince a spouse to stick to it?!!!

    • Jennifer says:

      We have that same problem. I had trouble with my hubby just running by the grocery store for snacks to tide him over on his long commute home, so I started giving him an extra $20 bill each pay period to use for that. It worked well for a while, until he got used to having that extra $20 and started using it for discretionary spending and then started putting the snacks on the card again. You may want to talk to your hubby about what you could do to make the cash system work best for him.

  • Sarah says:

    I use our credit card but we stick to our budget. If I must go over, I make extra cash by doing side jobs or selling a few items. Then I spend the cash on the stuff that we still need that puts us over our budget, I find a way to make ends meet.

  • Hollie says:

    Great post! We are in the midst of switching to the cash envelope system, for real (we have talked about it a lot but never truly stuck to it). As for the part about gas, while paying cash can be a headache it can earn you a discount. In our town there’s a station that gives you 5 cents off if you pay with cash … and many times they already have the lowest price in town.

  • kristi says:

    We have been on the envelope system for a little over a year and we love it. It is certainly challenging sometimes to plan ahead and work out the details of our budget (at the beginning of the month and then reviewed every Sunday) but it’s totally worth it. We have been able to save and cut back on a ton of things we were blowing money on. My only “real” frustration is when we need to pay somebody and only have large bills because nobody else is usually using cash. But again – it goes back to planning and getting smaller change whenever we fill up our envelopes.

  • Angie Y says:

    This is what we did with the gas conundrum. We buy our gas at Walmart as it is the cheapest place to get it. But we don’t like using our debit card at their pumps as they are one of those gas stations that puts the temp charge on your account until it clears. So what we do is budget how much we are going to need for gas for the month and then go and put it on a Walmart shopping card. This keeps us from the pesky temp fee, which can really goof your checking account up. And also, you get 3 cents off a gallon on your gas if you use their shopping card. Which is always a good thing!!

  • Sarah says:

    I think it all comes down to doing what works for your family. However, everyone should know where your money is going too.

  • Cassi says:

    I am so use to paying cash for gas that it never phases me…we use the gas station that has a connection to our local grocery store-in order to get the discount you have to go into the store to pay anyway PLUS we get a cash discount of $.03 off a gallon-I recently saved $.22 per gallon of gas.
    I LOVE going to the bank to get cash-my husband use to work there so I know almost everyone-they are super friendly. I am uber organized when it comes to my bank trip-I have it broken down into how many of each bill that I need so that I can break money down easily into the envelopes. I usually need a bunch of $5s so this systems works best for me.
    Thanks for sharing your tips!

  • Patti says:

    I have been using the cash system for a few months just to see what all the fuss is about. Honestly, I do not think it has saved us anything because I have always been frugal. I do not use it to pay our bills… just for items like food, drugstore, gas, clothes, postage, etc. I am able to stay within the budgeted amounts and usually have money left over (same as before). Perhaps it is a little easier to put that cash in another place at the end of the month. I think it is easier to handle cash at the stores. I have found it easier for my husband and son to ask me for money because they know I have cash at home so I have to be careful there. LOL I like the idea of using a gift card for the gas and suggest that you purchase these at your grocery store that may give you credits toward gas (fuel perks). I just bought some of those today for graduation and didn’t think to buy myself one!

  • Oralia R. says:

    I don’t carry cash. I noticed that I spend more when I have it on hand. I am also afraid of theft. I take the train Mon-Fri., lately there has been a lot of theft from something as simple as a phone. On payday I log the amount, deduct my bills and also what I will be placing into my savings. What ever is left is what I use for groceries. By my next pay check I usually have money left over. I usually transfer that to my savings. I have been doing groceries twice a month and I love it. I spend over $100 every other week but I’m still learning. For now this is what works for me so I think I’ll stick to it.

    • Stacey says:

      Oralia, you’re certainly not alone in spending more when you use cash! The system you’re using sounds like a great one…keep up the good work!!

  • Angie says:

    Great article and I agree with it almost 100%. Only I don’t find it a headache to go inside to pay for gas. As a society, we are getting really lazy. I can however, see how it would be difficult for a mother to drag several small children out of a car and into a gas station to pay for gas and then get them all strapped back into their car seats/seatbelts in the car. One option in this situation might be the gas stations at at grocery stores. Most have a kiosk with a window so one does not have to go inside. I get gas at my Kroger all the time. I earn rewards to save on gas. I have the option to park at a pump near the kiosk window, then walk up to pay with my kids safely nearby and in my sight. My kids are teenagers now, so it’s not an issue for me but there is that option.

    I don’t worry so much about theft either. I don’t carry a purse. I find it annoying to drag around. I have a small leather wallet, not like a man’s wallet but really small…my licenses and car insurance card fit inside. I fold up my cash and put it inside my jeans pocket with the small wallet. That way it is on me and not in a purse that someone can grab and run off with. I also am licensed to carry a concealed handgun, which I carry in a holster on my side. I am trained to use it and would defend myself and my family if our lives were in danger. So, I don’t worry about purse nabbing because I don’t carry a purse or being robbed at gun or knife point because I would fight back. Just my opinion of course and I realize everyone is different. Definitely worth learning to be safe as far as I’m concerned though. 🙂

    • Danielle B says:

      My husband and I are currently in the process of getting our concealed permits too. 😉
      I carry everything on my person that’s actually of value. If someone snatched my purse I’d probably laugh as they ran away, knowing what sore disappointment they’re in for when they actually open it. If my cash gets stolen, there’ll probably be a whole lot more to worry about, such as loss of life, then a few 20s being stolen.
      And that’s just my opinion too. 😉

      • Angie says:

        Hi Danielle.

        It’s always nice to ‘meet’ another gal that’s pro concealed carry. 🙂

        I’ve had my permit for 14 months now and the only challenge for me has been trying to find the right carry gun. Being female it’s harder to find one that’s easily concealed. I don’t want to carry the gun in a purse for obvious reasons…purse snatching, etc. I want the gun on my person where I have the best chance of getting to it in time if I ever have to use it.

        My husband has his permit also. I’m glad we have this freedom and hope we always do. 🙂

    • Jennifer Ott says:

      I know there are places with windows, but there aren’t where I live (believe me, I’ve looked since we’ve had them everywhere else)! We do use the pump at the grocery store because of the discount! Just one of those things for now… I am not entirely lazy since I am also a distance runner; just too lazy to unbuckle 4 kids, get them in the store, convince them not to touch…or look at (!) too much, wait in line, pay, get them back out, load them up and buckle from the two sides of the van, then go our merry way! I would probably spend more on impulse purchases if I did that!

      • Angie says:

        Hi Jennifer.

        I understand your situation completely, which is why I used the example of a mother with several small children in my post. It would not be fun to take three or four small children out of seatbelts/carseats and into a gas station and then back out to the car to get everyone fastened in again. 🙂

        How inconvenient that you can’t find kiosks with windows in your area! Sometimes we have to do what is best in a particular siutation/time of our lives. So, do what you have to and be happy! 🙂

        When my children were small, I used debit/credit cards at the pump also. That was before I was trying to live all cash/no debt. 🙂 I love the freedom I feel now that we are on a no cash system.

        • Angie says:

          Oops! In my above post I meant all cash system…not no cash system. I haven’t had enough caffeine yet this morning. LOL!

  • Esther says:

    Kristen–what a great post! I took the plunge two months ago with using only cash for groceries. (We’re still working on the other categories). However, it has been so freeing to know just how much I have to spend each week. It limits the impulse purchases and actually has been so freeing. I’ve been debating making a cash envelope for “fun money” for me since I tend to overspend on items like clothes/coffee/impulse buys. I totally think if I have a fixed limit, just like with the groceries, it will be so freeing and help eliminate the guilt that comes with the impulse buys.

  • My husband and I are debt-free, live off of his income alone, are saving 10-15% of our income toward retirement, AND tithe our 10%. And…we use credit cards almost exclusively. We pay off our cards (yes, we have multiple) every month and earn literally HUNDREDS of dollars in cashback rewards because we use them on the rotating categories to earn higher percentages. This works well for us.

    We use a program called YNAB (You Need a Budget) to plan each month’s budget (which is based off of the income earned the month before), and we track every single expenditure in there, too. When we have a trip coming up or need to save for a big-ticket item, we budget the leftovers from the previous month’s spending (i.e. when I stay under budget on groceries) into a savings category for that thing, so once we get it, it’s akin to spending cash because we know we have the money saved. In fact, I have a tendency to lose track of my cash because I’m not always given a receipt! So I am terrified of the cash envelope system, especially because we currently have our finances well under control.

    But again, the best choice is whatever works well for your family! That’s the most important thing.

  • Kath1213 says:

    I’ve used both systems and prefer cash envelopes. Accountability factor is huge with cash only.

    To each their own, however 🙂

    One thing to consider…in case of a tornado, hurricane or earthquake (I’ve experienced lots of quakes and hurricanes) you WILL need cash to get gas since the gas stations may not be able to accept credit/debit cards.

    Was driving home late at night several months ago and stopped to get gas right off the Expressway. Several people were stranded since the gas station’s Point of Sale system was down and they couldn’t use their cards. Having cash saved my life 🙂

    • Sharon says:

      Very true about needing cash in case of catastrophe/emergency! The end of last October we were hit with a nasty blizzard (I live in New England). Many areas had no power for a week or longer, so even finding a gas station open was a challenge–and gas use was way up due to so many people using generators. The lines were terrible, and many of the gas stations that were open were only taking cash payments. Most banks were without power as well, so not many ATMs available. Fortunately I keep a small stash of cash for emergencies; it came in handy!

      That said, I tend to use my credit cards much more often than cash–I always pay off the bills every month, and I know exactly what I’m spending. It works best for us right now, although that could change in the future.

      Whatever works for you–we’re all different!

      • Andrea says:

        We’re also in New England and have faced same problem twice! Once, we needed firewood to keep our pipes from freezing during an extended outage. Last time, we needed gas in the van and ice for the coolers. I’m so glad we had extra emergency cash on hand.

  • Jen says:

    My concern about a cash envelope system involves credit. How do you improve/maintain your credit score if you are only using cash? Has anyone, who has been using the cash system for years, noticed how it has/has not affected their score?

    • Kim says:

      I think that is a valid concern. I definitely would not advise cancelling your credit cards, because I know for a fact that that will cause your credit rating to plummet. If you have way too many, cancel them one at a time spaced out over months. You should keep at least 2 major credit cards and ideally 1 store credit card (Kohls, Target, etc.) to get the best credit rating. I would recommend using them at least some for paying bills, online purchases, etc. so that you continue to have a history of using credit wisely. I’m sure you can look at financial websites for more info. (:

      • Jen says:

        Thanks for your response! Your information was helpful!

        • Kim says:

          You’re welcome! It is wise to consider how cash might affect your credit ratings, especially if you foresee needing a loan in the next several years. My husband and I learned a lot about credit ratings throughout our marriage. For a couple of years, he had an extremely low credit score because he never had a cc. Then, because he had no credit history, he couldn’t get a credit card in his name. Vicious cycle! We finally found a student card with a very low credit limit that he qualified for since he was in school for his master’s. After getting that credit established, he was able to get a second credit card.

          Fast forward 5 years and we were ready to buy our first house. We both had excellent credit ratings and it made it so easy to get a low interest loan. Our hard work in establishing credit history paid off!

          If you are concerned about your personal credit, make sure you have a couple of cards that you are the primary cardholder (not your husband, assuming you are married). If he’s the primary (even if you also have a copy with your name on it), it doesn’t help your credit and vice versa.

          The other main areas that I’m aware of that affect your score are:
          – If you make payments on time!
          – The percentage of credit you utilize: If you have a credit limit of $1000 on a card but usually only spend around $200 on the card, this helps your score. If the limit is $1000, and you often get near or reach the limit, then it can hurt you. This basically shows that you are careful with the credit you have.
          – The history on a card- the longer you have a card the better. Over 7 years is ideal. This is why it’s important not to cancel cards you’ve had for a long time.

          You can check your credit report once a year for free. There are 3 credit reporting agencies, so you can space them out over the year to best keep an eye out for fraud or suspicious activity on your account. These reports usually do not show your credit score (unless you pay to get your score), but will give you a clearer understanding of what cards are in your name and what your habits look like.

          Anyway, I was going to say all this earlier today, but the sick baby was waking up and I had to run. I hope it helps! (:

        • Kim says:

          Make sure that you have a couple of card that you are the primary card holder if you are concerned about your score. For example, if you are married and your husband is the primary, then the card will not help your credit (even though you may have a copy of the card with your name on it).

          I had to run and get my sick baby who was waking up crying earlier. So here are a few other things that affect your credit score:
          – If you pay off your cards on time
          – The % of your credit limit that you utilize. You want to have as high limits as possible. But most importantly, you don’t want to be regularly using most of your credit. If you have a $1000 credit limit on a card and you usually spend about $200 on it, then it helps your score. If you spend close to the limit or max it out routinely, then it hurts your score. Basically, creditors want to see that you have a lot of credit, but don’t use much of it (that you are careful with your credit).
          – The history on your cards matters. The longer you have had a given cc, the better it is for your score. 7+ years is the ideal length of time. Thus, it is important not to cancel a card that you’ve had for a long time.

          That’s all I can think of right now. You can check your credit report once a year for free through each of the 3 credit reporting agencies, though you may have to pay if you want to see your actual score.

          It is wise to build a good credit history, especially if you foresee needing to take out a loan for a house or car in the future. My husband and I have learned a lot through our experiences! (:

          • Kathleen says:

            You may be able to get a free credit report from your credit union or bank. My credit union gave me a free report. It dosen’t hurt to ask.

          • Jen says:

            Thanks so much for the response, quite helpful. Good luck with the baby!

  • i agree with this 100000% however, it IS rather hard to go into the bank and pull out all the money needed for envelopes each month. the manager (who knows me now) is often called, because they fear I am a drug dealer or something. Crazy society we live in to think that they are the only ones who use cash!

    • Amy says:

      Oh no! That’s terrible…I guess I am very lucky that I go to church with the teller I use at my bank! 🙂

  • Nichole H. says:

    I usually am not good at the grocery store. I spend at least $100 a week with coupons!!! Last week my husband handed me cash and asked me to stop by the bank to deposit it. Instead, I used it to buy groceries. I had my list, coupons, and cash. I carefully calculated everything and instead of seeing something the kids would like and just throwing it in the cart, I only bought what was on the list. AND I ONLY SPENT $43!!!!!! This is my new way of grocery shopping, I will never use my debit card again!

  • I started using the envelope system when I was 16 years old and have a job. Nobody told me to do this and did this on my own…I’m a money nerd. I started very young doing a budget and write down every thing we spend. We are debt free, except for a small mortgage and live well below our means, but we put everything on the credit card, which we pay off every month. For me, if you spend only what is on your budget(balance sheet), then it doesn’t matter whether you use a credit card or cash. Cash is so much easier for me to spend because, in my mind, I can just go to the bank and get more(was a waitress for 9 years and was paid mostly cash). Paying for something on the credit card will show up in your statement and all purchases are accounted for. I think the key to spending is to have a budget and write all expenditures down.

    • Jennifer says:

      My husband and I are working on being that dedicated to our finances. I love the idea of using the credit card for all purchases and paying it off every month. But I don’t think my hubby has that much self control. We’d be deeper in debt than we already are if I gave him free-reign to use the credit card for everything.

      I have a love/hate relationship with my debit card. I no longer carry a check book or a check register so nothing ever gets written down and no daily balance (though I do have quicken and I should update that daily) I miss the days when I knew the exact balance in my account and knew if I could write a check for $5 or $50 and not have to worry. I suppose I could go back to writing checks, but I am finding that a lot of places no longer accept checks. boo!

      And you are right about cash being too easy to spend. I personally do much better with an account where I can see the balance going down. The only reason I use cash instead of an account for my personal spending money is because my bank kept getting hacked and I kept getting locked out of my online banking and couldn’t check my balance as often as I wanted. I was also concerned about the security of my bank while that was happening, so I closed that account.

      • Jennifer, every night on your budget, write down EVERYTHING you’ve spent for that day. Ask you husband for receipts. I had my husband physically write down his expenditures and deduct it from the budget. If we had $400 for the budget for groceries and he spent $8 for a case of coke, then the balance would be $392, etc. If your budget for recreation is $100 a month and you only have $10 left and there’s still one weekend left, then you can’t go to the movies until the next month. If you or he is buying little things with cash such as a latte or coke at the drive thru, just allow yourselves $10 a week each in your budget, or take out cash for that little amount. The important thing is to set your budget so that you are saving money each month if it takes getting rid of cable, a landline, or eating out. Your goal should be to have a cushion in your checking account, say $2,500, so that you don’t have to check your balance every day. You need to tell yourself and your husband that $2,500 is your new zero~ and that you are broke when you’re balance gets to $2,500. Remember to include any bi-yearly or yearly payments in your budget, such as Christmas. If you spend $1,200 on Christmas, then put $100 a month in your monthly budget for Christmas. This should be in addition to your cushion fund($2,500) I also pay cash for my cars and have a “car payment” to myself in my budget. Hope you find a good bank to deal with.

        • Jennifer says:

          These are all great ideas. And as our household manager :), I really need to be on top of these things. I think I will sit down and get our accounts current (they are only a few days behind right now, so it shouldn’t be too difficult) and then work with hubby to get the balances up. We were trying to keep our “zero” balance around $1000, but that has dwindled. We need to stop eating out to get that refilled. That is on me. If I cook at home, there is no need to eat out. So planning, planning, planning. Our household account is at a bank we trust and have been using for decades (it was my account from childhood, and we began sharing it after we married). Our personal cash accounts were at separate banks, to make it difficult to just transfer funds if we overspent personally, that is the one I was having trouble with and closed. So now if I am out of cash, I am out of cash. Our goal is to pay cash for our cars soon, but we are pregnant without maternity insurance and the money we would be putting toward our new car is going to pay for the baby. (A fantastic trade in my opinion :)) So hopefully our current cars will last a little (or long) while longer.

  • Jennifer says:

    I was just wondering what people do about “online” shopping. I mean, you can’t really use cash that way, can you? I’d like to try the envelope system, but since we are SO VERY rural, driving/gas to get supplies is often much more expensive than just ordering it online and have it shipped (often for free) to my address.

    • Jennifer says:

      Jennifer, check into using an online/virtual envelope system. Maybe one like mvelopes. Or just use envelopes for some things. We use it for Christmas savings, groceries, church offering, saving for property taxes, misc gifts (bdays, mothers/fathers day, graduation, etc) & “allowance” for my husband and myself. We use our checking account for everything else. But having certain things not in the account ensures that $$ doesn’t accidentally get spent. Last year I bought visa gift cards with our Christmas cash so that I could make online payments for stuff I purchased on Amazon & another online site.

    • Tammy Wagner says:

      We live in the sticks as well, and online shopping is definitley more economical–never mind much less frustrating, since I have two toddlers to tote along! We do have a budget & we track all our expeditures. We use a credit cards but pay them off every. single. month. (Since my hubby is very disciplined, this works for us. Even thought we live on one modest income, we actually have about $500 in rewards points to “spend” right now!)

  • Courtney says:

    I agree with previous posters who worry about theft. We live in a fairly rural area and although the crime rate was low here once upon a time, since the economy hit the skids the theft rate has skyrocketed. I definitely would not want anyone knowing that I was carrying a large amount of cash or keeping it in my house or car!

  • Ashley says:

    We do a 50/50 system. We use envelopes for some things and use our bank acct for other things. It works really really well. I would love to go all envelopes but my husband loves being able to pay most of our bills online.

  • jerilyn says:

    I’m a complete scatterbrain at this moment in life so I’m sticking with my plastic. Once my baby brain fog goes away (if!) I plan on returning to some cash systems if that works best and being able to keep track it of it a little better and my wallet!

  • kim c says:

    Still paying debt, want to use cash for some things, debit/credit for others and pay off each month to restore history. Want to teach my 14 yr old and 7yr old the same habits we desire. How does one get started? Already use Dave Ramsey snowball, Quicken for tracking, major coupons for everything! But making the switch to cash for some things is where I am caught up. I don’t know how to “take the plunge” without making other parts of our budget suffer. Thoughts?

    • Amy says:

      Oh take the plunge!! It’s well worth it! 🙂 Just keep one thing in mind you still have to spend the money to feed the family, clothe them, put gas in the car/truck and you still have to do this whether you are using debit/credit or cash.

      What I did first, as I’m still paying off debt too, was to start tracking every purchase (even the small ones) and categorize it all so I knew how much our family spent every month. I did this for a couple months just to get the jist of where every little dime went and then put that into a workable budget. Like groceries for instance, I tracked two months and then averaged it. Say I used $400 one month, $600 the next so I would put $500 in my budget. I figure I would take one step at a time and the first step for me was using cash. I can always work my way down to a lower $$$ amount for groceries per month later (which I have) and I know using cash can help lower this amount too! By using cash, I’ve noticed I am more apt to put things we really do not need back than when we used debit.

      After I knew what we were spending…I knew what my budget could be. So once I saw where it goes and had a budget in mind, I then divided by 4 and set that money aside in cash each week since my husband is paid weekly. I always have to adjust things as he’s paid hourly but at least I have an outline now and knowing where it’s all going and it helps make sure everything in my budget gets paid.

      We’ve been doing the cash system since March, as Jan. & Feb. were the months I tracked the amount of money we used, so far we’ve paid down almost $4,000 in debt! It’s amazing especially since we were living paycheck to paycheck and sometimes those paychecks were not enough! It’s hard but well worth it!! 🙂 I hope I helped answer your question!

  • Shelly says:

    At our home we have been using the envelope system for years now. We don’t spend as much as we used to. We don’t have any debt and if I need to purchase something online I do use our one credit card. It is paid off each month and I have a budget for how much can be purchased on it.

    It is really funny for me to consider when we had twice as much income as we have now. We had two or maybe three credit cards and we had very little in savings. Now our income is half, we have no debt and we have a good amount in the our savings. Not to mention two kids too.

    I think everyone has to consider what is best for their family but I am so glad we went to a cash system for our money management. It was really the best thing that could have happened to turn our finances around.

  • Sporksoma says:

    I will share my experience going cash-only.

    I had just gotten out a large sum of money in order to go grocery shopping and pay for my car tag. I left my purse in a store, with all that money in it. I’m super lucky that a good Samaritan found my purse and didn’t take the cash in there (it was several hundred dollars worth). After that, I vowed I would never be cash-only again, and using a debit card or a credit card has worked out so well for my family, we’re being PAID to use the credit card. What’s better than getting an extra $100 per year just because you bought stuff that you were going to buy anyway, like groceries and gas?

  • Carrie says:

    I’ve used both cash envelopes and my debit card. I spend far less using cash envelopes. I only put enough money in them for a week at a time. I carry my purse across my chest when I shop so it is always close by me.

    I appreciate all the comments about the wives honoring their husbands wishes, but from a divorced woman, please be careful in this area. My husband was terrible with money. I went along with his ideas in handling the finances and now I’m paying the price with a large credit card to pay off. I wish we would have used cash.

  • Our family has used cash envelopes steadily for the past 10 years. I find them less work than using my debit card. When we used a debit we had to remember to write down each purchase and I would always be paranoid that we were going to somehow go over in one area and eat into money that was needed for other bills. But with cash that can’t happen. I feel like it has made my financial responsibilities less of a headache than more of one. Oh and I do go in and pay cash for gas, since my kids are older and I save 5 cents a gallon that way. But if I had little ones, that couldn’t stay alone in the car for a moment FORGET IT I would just debit it!.

  • LOVE THIS: “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 True!

    After years of using the cash envelope system and refining our budget, we recently switched to using a rewards credit card. We keep track of EVERY penny in our budget and I can honestly say that swiping my card is just as meaningful as using cash since i know EXACTLY how much money I have allotted in each category of my budget and HATE spending the extra money if I don’t need to.

    It has paid off incredibly so far because not only do we stay well within our budget, but we are able to continue to pay off our debts, AND we get points/extra cash from our credit card. Not something you can get from using cash.

  • JJ says:

    Quote: “Thank you for saying “Ultimately, do what works best for your family.” I get very weary of hearing/reading folks say “the cash envelope system is the best/only way to manage one’s spending” and implying that those who use credit cards are foolish, as that’s simply not true!”

    I am so glad to be reading that. Whenever I come here, I feel as though I am inundated with the notion that I am inferior to others because I do not subscribe to the envelope system.

    I live in one of the largest cities in the United States and I have two issues that have nothing to do with what is posted above: (1) I do not like the idea of carrying cash on me or having large amounts of cash on me due to safety concerns and (2) Because I live in a city and walk everywhere, sometimes by hundreds of stores a day, carrying cash burns a hole in my pocket. I will make any excuse to spend a few dollars just because I want something. Sorry but for me, it’s more painful to swipe my credit card—THAT’S when I’m actually thinking about the money I’m spending. What works for us is setting a budget (thanks to pear budget excel sheet) and just sticking to it regardless of whether or not we’re using credit cards.

    I think if I lived in a place which required driving everywhere, it would be much easier to keep me out of the stores.

    • Crystal says:

      We have lots of people who do lots of different things here. No one is inferior here — you’re all loved and appreciated, no matter what you believe about credit cards or whatever else in life. 🙂

      The goal is to be a wise steward of your money — and I want to constantly challenge people to think outside of the box or try something new if their current system isn’t working really well. Almost all of the ideas presented here won’t work for everyone, but I hope that they will challenge and inspire those who need to be challenged and inspired.

      And if the idea doesn’t work for you, just skip the post without guilt!

  • Catherine says:

    I don’t use cash, but I do have a pretty strict budget that I follow.
    Regarding 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!”

    If my co-workers ask me to go out to lunch with them and I’ve already spent my “lunch money” for the month, I flat-out tell them that. The first time it came up, I thought it would be awkward, but it was actually a great opportunity to open their minds to budgeting (many of them make much more money than I do and have much more disposable income) and now they just accept it & I don’t have to make up some other sort of excuse. 🙂

  • kathleen vasquez says:

    What if the envelopes get stolen or lost? There really is no protection for that. Also, I am intending to buy a house but my real estate agent told me i didn’t have enough credit cards to buy a house because you need at least three. I thought it was good that i was debt free but you do need credit to buy a home. I applied for three that offered 0% interest with no annual fee for 12 months and after the year was over i left them active but didn’t use them, this built my credit. So now i am still debt free but have a 750 credit so i can finally buy a home! I think it is great that the cash system works for some people, but you do need to have some kind of credit score when starting off.

  • 294ever says:

    When my husband and I were first married, we tried the envelope system. We had no savings and lived month to month. We got all our cash for living for a month at payday and found that it went very, very quickly. We ran out of cash in some categories right away and other categories had too much money. So we started borrowing from one envelope to another and pretty soon the IOU’s got so confusing and all the money ran out before the end of the month and we ended up using credit. We were very frustrated when we realized we had spent way more money than we normally would in a month. After that expensive fiasco, we gave up on the envelope system. My husband will spend whatever is in his wallet so if I give him $50 for gas for the month, it will be gone by the end of the first week and I will have to give him $50 more for gas to get him to and from work. If I give him a credit card, he is much more careful because he doesn’t know the current balance and he doesn’t want his credit negatively affected. I pay all the bills with checks, but all day to day expenses are put on the debit card. We have found it works for us and we never carry a balance and only have a car and mortgage debt which we are slowly chipping away at. We keep some small cash hidden in the car for emergencies and I always stash about $200 in cash at home (my husband doesn’t know about that!) for peace of mind and when something unexpected comes up, etc.

    • Jen says:

      I agree, I actually spend cash more readily than using the debit card or credit. I’m starting to think that it doesn’t really matter how I’m spending, the bottom line is I spend too much, and I really need to work on that more so we can save the way we’d like to.

      • Liz says:

        Jen, I feel the exact same way you do…I spend cash more readily too, and also agree I just spend too much PERIOD! 😛

  • 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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