Have you heard of the cash envelope wallet system? If you’ve heard of Dave Ramsey, you’ve undoubtedly heard him tell you that cash is the only way to go to stay on budget.
My wife and I started using a cash envelope system when we first started our debt-free journey and, from experience, I can tell you it was a huge pain – but it worked!
If you’re on board and ready to start using cash for your purchases – congratulations! You are well on your way to finally get out of debt and start making some serious progress toward your money goals. A cash envelope wallet system is the perfect way to control your spending and to take control of your finances.
This ultimate guide will provide you information on what the envelope system actually is and how you can use it to your advantage. I also have great recommendations for the best cash envelope wallets on the market and where you can pick one up without breaking the bank.
If you’re feeling crafty and want to make your own cash envelope wallet, I have those instructions for you also!
For easy navigation, use the table of contents below to quickly move throughout this guide.
What Is The Cash Envelope Wallet System?
If you have your monthly budget in place, using cash for purchases is an excellent way to keep yourself from overspending. The cash system gives you a certain amount of money to spend in categories YOU decide and will keep you within those boundaries.
Each month you will take a certain amount of cash out of the bank and put it into the different sections of your wallet. When you run out of money in a certain section, it’s time to wait for the next month before you buy anything else from that category.
No more overspending with the swipe of a credit card!
The Benefits Of Using A Cash Divider Wallet System
If you have ever tried to stay on budget while using credit cards, you probably understand how difficult this task can actually be! Using credit cards takes the pain and emotion out of spending.
If you go to the store with a credit card in hand, it’s relatively easy to swipe that card and buy whatever you want. There really is no pain associated with the purchase until the end of the month when the bill arrives.
If you go to the store with $40 dollars in cash for food that needs to last until the end of the month, spending each and every dollar can be painful. This will make you pay much more attention to your purchases if you know you only have a finite amount of money to spend.
When the cash runs out – it’s out. Plain and simple.
Using cash is somewhat of a budget hack if you think about it. No more overspending – no more high credit card bills at the end of the month. Add a little spending pain to the mix and suddenly you can be much better at sticking to your budget!
Using A Cash Envelope Budget Wallet Keeps You On Track
Let’s face it, when you use a credit card throughout the month, it is difficult to know exactly how much you have spent on a certain category. You either need to be incredibly diligent in documenting each purchase or check your online statements daily.
With cash, each time you go to spend you can see exactly how much you have left until the end of the month.
Overspending Is Difficult To Do With Cash
As I brought up before, credit cards purchases are tough to accurately track. I find I spend much more when I use a credit card because I don’t know how much I have spent at any given time.
With cash, when you run out you either need to consciously take money from another category, or you have to deal with it. It is no secret when you have spent all you have budgeted.
No Overspending Means No Overdraft Fees
Overdraft fees have a way of quickly reminding you of how much money you don’t have. Overdraft charges have become commonplace by couples who attempt to budget with credit cards or debit cards. The tracking of how much money in your account can be difficult depending on pending charges and other holds on your money.
With a cash envelope wallet system, you can avoid any overdraft charges once and for all. When the cash is gone – it’s gone. No more being charged extra money by accidentally over-drafting.
How To Create A Cash System That Actually Works
With your budget in hand, identify the categories that you cannot pay automatically. For instance, your gas or electric bill should be set up to be paid electronically through your bank account. Groceries, however, can not be set up this way.
Find the areas in your budget that you would normally use your debit card for.
What Categories Are In The Envelope System?
Each family has different spending needs, but many of the categories will remain the same. Here are some common categories that you may want to include in your cash envelope wallet:
- Discretionary Entertainment (i.e. movies, baseball games)
- Dining Out At Restaurants
- Personal Hygiene (hair cuts/makeup/soaps)
- Planned Health Expenses (doctor visits or medication)
- Vehicle Maintenance (oil changes/new tires)
- Birthday Gifts
- Fun Money
- Anything Else You Have Budgeted For Cash
How Do You Start A Cash Envelope System?
With your properly labeled envelope categories, you can start putting your hard-earned cash in your wallet.
If you still need a wallet, read on – I have reviewed some of the best cash envelope wallets currently available.
There are a couple of options for how you can fund your system.
Option 1: If you have the available cash, you can fully fund your wallet at the beginning of the month. Take the money out of your checking account and fill up the categories with the amount you have budgeted.
Option 2: If you are short on available cash, you can wait until you get paid throughout the month. Slowly fund your cash wallet as you receive income.
With either option, you need to remain disciplined and only use what is in the wallet. For example, if you want to go out to eat but can’t fund that category until your next paycheck – learn the value of patience. Don’t fall back into the habit of using a credit card or borrowing from another category.
This cash system will take some time to get used to it but it will pay off in the long run.
What Do You Do With Extra Money?
It’s the end of the month and you have $100 left in your grocery fund? I have a major virtual high five coming your way!
Coming in under budget is definitely something to celebrate. This is where personal finance is personal. You are a grown adult and can use that extra money however you see fit.
If you want to celebrate by going out for a celebratory dinner – be my guest! If you want to use that extra money to put towards your emergency fund or pay down debt, that is awesome too! It all depends on what money goals you have and how quickly you want to achieve them.
How To Use A Cash System When Shopping Online
Using cash is great, but what if you love taking advantage of Ebates to save money while shopping online? It’s true, you can often save a large amount of money by finding the best deals on the internet.
Don’t fret – there is an easy way to navigate the cash envelope system when shopping online.
Using cash is all about teaching you discipline and how to avoid overspending. This doesn’t mean you need to avoid technology altogether. If you find a great deal online, make the purchase with your debit card and take that amount out of your cash wallet.
You can either deposit your cash back into your checking account (time-consuming) or you can save the cash and use that amount to fund your wallet next month. Either way, you are holding yourself accountable by not spending more than what is in your wallet.
Deciding When You Should Invest In A Cash Envelope Wallet
Throughout my time budgeting and managing our finances, I have found that there are certain times when I need to spend money in order to save money. If you are struggling with staying on a monthly budget by using credit or debit cards, now may be the perfect time to invest in a cash envelope wallet.
However, investing in a cash envelope wallet doesn’t mean you should spend $100 on one. Be reasonable and get a wallet that will serve your purposes and that you can live with.
By investing in a cash envelope wallet now, you have the potential to save a bunch of money each month that will more than pay for your investment in one of these wallets.
Below I have outlined some of the best-rated cash envelope wallets. Look through them to see if any of them will fit your style and needs.
Things To Consider When You Are Choosing A Cash System Wallet
As a police officer and a finance writer, there are several concerns I see with cash system wallets. In general, you want a wallet that will be functional but will also keep your money safe. Consider these things before you purchase your cash system wallet:
- Pay attention to the size of the wallet. Some wallets are larger than others and may be more cumbersome.
- Do you want a wallet with a zipper to ensure your cash does not fall out or are you comfortable with a folding type wallet?
- Keeping all of your money on you at all times can be dangerous. If you lose your wallet or someone steals it, all of your cash is gone. If you worry about this, look for a wallet that has detachable categories you can leave at home. Otherwise, leave your cash at home and only carry the cash in your categories that you intend to use each day.
Several wallets can provide both functionality and security and I have highlighted them below.
The Best Cash Envelope Wallet Systems
I have compiled a list of the best cash envelope wallet’s based on their average user rating. All of these wallets are sold by Amazon so you know you can buy with confidence because Amazon has a great return policy!
#1. Savvycents Wallet
This is the #1 rated cash wallet system on Amazon.com with over 190 customer reviews. With this wallet, you can organize your cash, coupons, receipts, and store cards in a fashionable way. They have a variety of colors and styles for you to choose from. What I like about this wallet is the slim design with a zipper for increased security.
This wallet comes with 5 separate divided pockets to organize your cash. This wallet can be found on Amazon.com here.
#2. All In One Cash Envelope Wallet With 12 Budget Envelopes By Soligt
What is great about this wallet is the amount of functionality you get from it. You not only get the wallet, but you also get 12 envelopes, 12 budget sheets, and 1 binder note so you can organize your budget in this all in one wallet.
The cash envelopes are easily customizable so you can fill in your specific categories. In addition, it comes with a zipper for safety and security and you can also remove any money envelopes you are not going to use. This is one of my favorite cash wallets. You can purchase this item on Amazon.com here.
#3. The Great Divide. A Cash System Wallet With 5 Magnetic Cash Envelopes By Divvy Up.
The Divvy Up wallet has room for 5 cash envelopes, 2 extra storage pockets, and room for 12 debit or credit cards. Please tell me you don’t have that many cards!
This wallet has great reviews on Amazon.com and offers five different colors and styles for you to choose from. In addition, it has a zippered enclosure to keep your money safe.
You can find this wallet on Amazon.com here.
#4. Divvy Up The Savvy Spender – Large Fold-over Budgeting Clutch Wallet
Taking up the #4 spot is another wallet by Divvy Up. This Savvy Spender wallet is designed with your envelope system in mind to help you stay on budget. It also includes 5 magnetic cash envelopes that you can customize to meet your needs
You can find this cash wallet on Amazon.com here.
#5. Thrifty Zippers – Oilcloth Envelope System Wallet
The Thrifty Zippers cash wallet is designed with your cash budget and extreme couponing in mind. It features 6 zippered pockets so you can also store your cards and checks in one central location.
Size: 8″ x 4″
Check out this cash wallet system on Amazon.com.
#6. Bella Taylor Carmine Cash System Wallet
The sixth highest-rated and reviewed cash wallet is the Bella Taylor Carmine Cash System Wallet. I am a big fan of the way this wallet looks – it definitely is a beautiful way to budget!
This cash wallet comes with 8 envelope slots and label inserts that you can customize on your own to match your cash categories. The wallet also has space and slots available for your cards, identification, and checkbook.
Size: 7.6″ x 4.25″ x 1.4″
You can pick up this cash system wallet on Amazon.com here.
#7. Expanded Horizons RFID Blocking 10 Divider Cash Envelope Wallet
Coming in at number seven is this simple yet effective Expanded Horizons cash envelope wallet. In addition to the cash system, this wallet comes equipped with RFID blocking technology to keep your magnetic cards safe!
Expanded Horizons made this wallet in a unisex design to cater to your cash budget, coupon, and receipt needs. It can also fit in coat pockets or larger front pant pockets.
To learn more about this cash wallet, check it out on Amazon.com here.
#8. Finelaer Leather Clutch Purse Envelope Wallet
Last but not least is this leather clutch purse by Finelaer. This is one of the more fancy wallets because it is 100% real leather and registered in the USA. The Finelaer cash wallet comes with a snap to secure the wallet and has six separate slots for your cash.
If leather is more up your alley, this wallet is definitely something to look at to help you stay on budget.
You can find this cash envelope wallet on Amazon.com here.
How To Make Your Own Cash Envelope System Wallet (DIY)
If you’re really low on funds, making your own cash envelope system wallet may be the right choice for you. It turns out, with some cheap materials at home, you can create your own cash system by designing your own envelopes. If you are the arts and crafts type, you can certainly do this on your own!
For more information on how to make your own cash envelope system (DIY) check out this step by step tutorial:
What is a cash envelope wallet?
A cash envelope wallet is a wallet designed specifically for people who budget by using cash for everyday purchases rather than credit cards. A cash envelope wallet specifically organizes your money into separate categories for easy access.
What is the best cash envelope wallet?
The best cash envelope wallet is one that will keep your money safe while allowing convenient access at the same time. The best cash envelope wallets are user-friendly and have plenty of categories available for you to customize your wallet to your own budget.
What is the cash envelope system?
The cash envelope system uses separate categories of cash to force you to stay on budget each month. Discretionary spending labeled with different categories such as “entertainment” or “food” is separated and funded with a certain amount of cash each month.