Why I Hate the Cash Envelope System

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Have you tried spending cash instead of swiping plastic to stay on budget? We tried the cash envelope method that Dave Ramsey recommends— I was really surprised by our results and how much I disliked spending cash. Why I Hate the Cash Envelope System

Do you lose track of where your money goes?  Do you use a debit card to pay for items, but have trouble sticking to your budget?  Me too.  It is so easy to swipe plastic!

My husband and I have just started using the cash envelope system after using a debit card for years.  I got my first debit card in high school and have been using it for pretty much every purchase ever since.  However, after going through Financial Peace University, we decided to give the cash envelope system a try.

If you aren’t familiar with the cash envelope system, it is a way to pay for things with cash only where you use envelopes to organize your spending into budget categories. For example, we have envelopes for food, clothes, household goods, and baby food/formula.  The idea is that in order to stay on budget, you can only spend what is in your envelope…

And it is awful!  We just completed our first pay period (two weeks) using this system, and I absolutely hate it.

First of all, when your money is gone, it is gone.

We took the money out of our bank account, so it isn’t there anymore.  In fact, it was scary for us to see the balance in our checking account dip so low after our trip to the ATM.  The money left in the account is just for bills that have direct deposit or e-payment, with a little buffer.

With the cash envelope system, you don’t really have any extra laying around—it is all in your budget envelopes, and it all has a specific purpose for how it should be spent. So when the cash is gone, it’s gone.

When you use cash to pay for things, you have to really keep track of everything you add to your cart.  It would be pretty embarrassing to get to the register and not have enough cash on you!

Now I am forced to meal plan to make the most of my food budget because going over just isn’t an option anymore.  I can’t grab an extra pint of ice cream for a treat if I don’t have the cash on hand.  I can’t just go shopping for new socks if I accidentally dye them all pink in the washing machine—I have to wait until the next payday.

And you know what?  This sucks!

The cash envelope system is inconvenient.

And the grocery store is THE WORST.

I have carefully meal planned to stay on budget.  I have miraculously made it through the grocery store with a 9-month-old, adding each purchase to my total with a calculator (that the baby keeps thinking is a toy), and I know I have enough cash.  Then I get in line and unload my cart onto the checkout belt while struggling to entertain the baby.

Now it is time to pay, so I take out my envelopes.  I have to flip through like crazy to find the one I want while the cashier looks at me with pity.  I pay with cash, and he hands me my change in bills and coins, with my receipt tucked behind my bills.

People behind me in line are waiting, so I push the cart—with the cash and receipt in one hand and envelopes in the other—out of their way.  Before I leave the store, I find a low traffic spot to stand there and shove my money into a tiny envelope.  This is usually the point at which the baby starts crying or screaming.  I just drop the change into my pocket, then try my best to get the envelope stuffed with bills closed and the receipt stored somewhere where I can find it.

It is so slow compared to using a debit card—envelopes get ripped, (baby) tears are spilled, and I leave the store 300% more frazzled than when I entered with my perfectly budgeted meal plan in hand.  It is inconvenient, embarrassing, and awkward.  Not only that, but my husband likes me to write the remaining balance on the envelopes when I get home, essentially giving me homework every time I shop. I hate it.

I can’t buy anything on a whim.

Like a lot of people, I struggle with impulse purchases.  With the cash envelope system, I can’t steal money from other budget envelopes just to buy something over budget.  It would be like stealing from myself, and when I am literally moving cash from one budget to another just to buy something I want, I can’t bring myself to do it.

When I use a debit card, it is easy to take a little from one budget to add to another.  It enables me to spend as I like when I can simply “work out the numbers” when I get home.  For example, I use coming under budget on our power bill as an excuse to go over budget somewhere else instead of saving the money.

With the cash envelope system, the budget is already set, so I don’t get the opportunity to invent my own loopholes in the budget in order to spend more money.

And I don’t like it.

But it’s worth it.

At the end of the day, the cash envelope system is awful on purpose.  It saves our family money by calling me out on my bad spending habits, and its inconvenience makes me want to shop less often and more carefully.

It is the perfect system to close all the loopholes I used to take advantage of my budget.  I don’t like it because it is a tough love financial intervention.  It is uncomfortable to be forced to follow your budget, but it is worth it!

We saved over $50 in impulse buys just in the first two weeks we used the envelope system!  And because I absolutely loathe change, we have decided to put all the coins we get as change into our Disney World piggy bank.  In just two weeks, we have saved $6.74 in coins!

The cash envelope system works for us, and it can work for you, too.  If you commit to using cash, you will have to stick to your budget, be forced to carefully meal plan, and you will cut your impulse buys cold turkey.  It sucks, but it’s great!

For more on how we set up our budget, check out Why You Need to Start a Zero-Sum Budget, and How to Write a Zero-Sum Budget.

Do you use the cash envelope system?  How do you like it?


  1. Arghhh! I feel your pain! We have been using the cash envelope system too. It takes a little planning and the cash flies out the door fast. It is worth it though!

  2. Laurel Deering

    When I was first married 30 odd years ago, there were no debit cards and this is how we budgeted. We were paid in cash and we had cash envelopes for everything. I’m single now and limited income so I have gone back to the envelopes which makes it easier to not overspend. Did lapse for a little while and now find myself paying off Visa bill😢.so going back to the envelopes😊

    • Thanks for sharing your story! I think that it is quite common for young families who grew up swiping plastic to not even know how to manage their cash – honestly, this was me and my husband just a few weeks ago! Now we are raised in a buy-it-right-now culture, and credit card companies are making huge profits from it. Good for you going back to the envelopes! Thanks for reading!

  3. Shelly

    Takes 21 days to reinforce a new habit; after many “pains”, my hubby and I now LOVE the cash system. We paid off $8k in debt in 4 months!

  4. Freda

    I have been using this system for 40 years, we have a philosophy in our household if you use plastic chances are you cant afford it. It just boils down to living in within your limits. We have been a 1 income family but have bought new cars, many trips overseas and bought up 2 children and educated them. Its not hard at all, just prioritize whats important. Believe me anyone can do it.

  5. Fi

    My husband and I used the envelope system and paid off 32k and paid cash for my knee surgery (4K) in 14mos. We still use it and are saving for a down payment on our first home. Using cash makes you question whether or not something is worth buying because we don’t give ourselves an option of using our saved money. When people invite me to go somewhere or do something I’m not wanting to do, I blame the budget and say, “I don’t have money for that.” People think we are crazy. If crazy means we have an every growing savings account, then yes. We are crazy.

    • I am all for crazy! Especially if it helps you pay off that much debt. There is nothing like controlling your cash instead of letting your account control you. It sounds like you guys have had huge success. Congrats! Keep the good things rolling and get into that new home!

  6. Amanda

    We use the envelope system, but instead of paper envelopes I went to the dollar store and bought a mini organ folder meant for coupons. I keep a spending spiral instead of writing on the envelopes so I can track our spending for years and later calculate the trends. The plastic organizer is easier to get money in and out of. The mini organ folder also comes with labels.

    • That is a really good idea. The more I use literal envelopes, the more frustrated I become. It is so hard not to rip them, and recently we have been lax about keeping a log because space is an issue. I am totally going to steal your system! Thanks, Amanda!

  7. ang

    We ended up in a homeless situation because of my ATM card spending. The shelter we lived in (for 2years) have a counselor you have to use to live there. They put you on a cash envelope system.
    It works! Saved up enough to pay cash on our home. Do it!

    • You have such an amazing story! You went from living in a homeless shelter to paying cash for a home with this system?! Absolutely incredible!

    • I have this wonderful leather wallet that holds a bunch of envelopes, I usually only carry the ones I plan to use while running errands that day. Lately I have been carrying more because once or twice I have left the wrong envelope at home.

  8. Julie

    I’ve been using a similar system for a couple years, but I don’t like the idea of a) carrying too much cash on me or b) going to the ATM so I use Mint.com to keep track of my budget for me. It’s like a virtual envelope system. I love it but you have to have self control, since you are still swiping plastic!

    • That is a really good idea, I didn’t know mint could do that. I have just had such great success carrying cash, I would have to be really really careful switching back to a card. I think that could be an awesome system, though!

    • Leah

      Living in a larger city, I’m always afraid that someone will steal my purse or pickpocket me. I’ve also seen people put their entire savings in an envelope on a “cash board” in a room in their house … I can’t see how that’s safe.

      I did read that one lady takes out her months worth of cash and splits it in two so she isn’t carrying around too much cash at one time. Then mid-month replenishes her envelopes with the remaining cash. Seems do-able, but I feel your pain about the grocery line … Silver lining you’ll be quicker than anyone who uses a chip card!

      Good Budget is a great app too.

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  10. Kat

    Oh, gosh. That was hard to read until I got to the last part. My fingers were ready from the beginning to try and talk you back into it! I’m so glad you see the good in it! It takes a few months to really get into the hang of it. Leave some xtra money in your bank account as a buffer and OVER fund your grocery envelope. You will get the hang of how much you spend every two weeks and shouldn’t need a calculator for long. If you need diapers and have no cash left, then that to me is an emergency and you can transfer some money from your emergency fund if you are familiar with Ramsey’s baby step 1. (It’s also there to ease worries of being pick pocketed) It does take longer at the register and you can feel the people behind you pressuring you. But, that is not your problem it’s theirs. Be different than a society that lacks patience and needs instant gratification. We don’t want to be like them. Hehe. Using cash has been a huge factor in my family paying off $25,000 of debt in 10 months. Keep at it. You are right…. it is so worth it! Speaking of apps, try EveryDollar. I’m not sure I could do this without it. I’m pretty sure it’s sent from God. Lol. It’s a little tricky to set up when you get payed every two weeks, but I figured it out.

  11. Kelli

    I see that I’m a little late for this, but thought I would post anyway 🙂. I very much agree with the accordion organizer instead of envelopes!!! I could not have done it with actual envelopes, but this works the same way and I always have all my “envelopes” with me and in order, so I can quickly find the one I need. We only keep money in them for things we buy frequently or that we can only pay for with cash (I love yard sales!), such as groceries, clothing, a little blow money, so there’s not tons of cash in there. For less frequent bills/purchases, we use quicken and have a virtual envelope system. EVERYTHING is categorized so we don’t overspend. We even have a virtual envelope for lawnmower gas. I have 3 young kids, so I know how frustrating the grocery store can be, but it gets easier!! And when you have kids in tow, you’re more likely to stick to your list and get out of there faster too 😉

  12. Gabrielle

    I dont use the envelope system because I live in Pittsburgh and people get robbed ocassionally so i use my debit card for most purchases and only keep like $20 in cash just in case. i save all my reciepts and write down the amounts in a little journal so i can see the remaining balance similar to the little logs on the evelopes. its a great way to stay accountable if cash isn’t for you.

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