The All In One Guide To Using The Cash Envelope Budgeting System

Coined by infamous financial guru, Dave Ramsey created the world renown budgeting system called the Cash Envelope System. Simple as it sounds a user takes cash and designates an amount to each envelope that represents a specific category. This method seeks to eliminate hassle creating an easy to follow cash based system. The best part about the system people like is knowing once the money is out it is out and they are not tempted to overspend or keep swiping their card.

Who Is Dave Ramsey?

Now before we get to the method there is a bit of background information to learn about Dave Ramsey. Have you ever heard of this financial guru? Many have strong opinions over his teachings from his disagreements over credit cards and hard beliefs of living on ‘beans and rice’ until people are debt free. Opinions aside, The Ramsey Solutions do show evidence of working. This can be seen through 19 national bestselling financial books, over six million families changed by the Ramsey financial plans, and top hit radio shows accumulating over 23 million listeners. The Ramsey team has a common belief that debt is bad and credit cards are a no go.

With this method in mind the cash envelope system came about. Many have used personalized wallets to just plain paper envelopes. Either way the method’ core principles remain the same, so with that let's get started.

How Does This System Work?

The amazing part of this system is that there are various ways to use this method and many have made adaptations to create the perfect envelope system for them. First we will talk about the original system and how the method works.

To first start you must have an income. This budgeting system is all based on your pay. Whether it is weekly, biweekly, or monthly this will determine how often you will have to refill your envelopes. Before you take out your paycheck in full cash lets start with understanding the budget categories. This can be anything from food, personal spending, transportation, child spending, housing ect. From there you must break down how much money you would like to delegate for each category. Then you just fill the envelopes. Simple right? Let’s see an example to make this easier to understand.


Income: $3,000

Pay: Every two weeks

Monthly Income: $3k * 2= $6,000


  • Housing Rent $1,000

  • Utilities $100

  • Food $400

  • Transportation $700

  • Personal Spending: Clothes, Make Up, Night Outs $400

  • Other $300

For this example, this is monthly. The income is biweekly so the income is doubled. All categories are for the full month. In total expenses accumulate to $2,900 or almost half the budget. So what happens to the rest? This is for paying off all debts, saving for an emergency fund and then investing. Now that you have seen an example how can this be used in your life?

Variations On The Cash Envelope System

Many have found different ways to make these systems their own. From not wanting to carry cash to having credit cards an adaptation can be made to still create a focal budget system with these core fundamentals. One of Empower Your Budget’s favorite variations to this budget is Jordan Page’s from her YouTube. Linked here, her video shows you the cash envelope system in its most minimalistic form.

For those who do not want to spend money with actual cash this method can be used with a debit card. This is called the cashless envelope system. This system still has the basic principle of allocating a specific amount to each category and instead of cash you just swipe that debit card. What about tracking the amounts? Good question! Most will just make cards or digitally track their spending and when the money runs out you can not use it anymore. While this is more convenient for those who do not carry around cash it will test people's self control as once the category's money is up they must stop spending.

Empower Your Budget Envelope System

With all the different methods there is no exact way to budget. We suggest trying methods to see what works best for you. For example, those with consistent salaries would benefit best with the Dave Ramsey Envelope System. For those who travel more may use the cashless envelope system to reduce confusion. Others just might see the simplicity of Jordan Page’s envelope system. These variations show there is no one fits all solution and it is up to you so see what works best.


To summarize the general process we start with our income and convert it to our method of payment. This may be to cash or process the income into their debit card. From there one must decide on their categories and delegate the amount they can spend per pay or month. From there you spend money for each category per usually and when the money is out you have spent all the money for your desired period of time. It's as simple as that. A few things to keep in mind is the execution of self control. This method only works if one is willing to practice the method under the conditions of actually saving money and wanting to spend within their limits.


The cash envelope system is a great way for users to learn and practice spending within their means. With simple instructions and steps to follow this method is a great way to budget. Variations of this system show the customization that can be taken to fix users of all budgeting needs.

To check out Dave Ramsey website Ramsey Solutions check here.

So what are your thoughts on the cash envelope system? Will you be trying it out? What is your method of budgeting? Let us know down below! Check out other articles related to budgeting concepts here or our FREE Master Money Budget Templates here along with the step by step blog guides located here. Thanks for reading and…


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