Tara Talks: Cash Envelopes


When it comes to budgeting what works for one this doesn’t necessarily work for another. The DreamBearUK Piggy Bank section is packed full of articles on how to save money, make money and to organise your money better. One very popular method I’m very tempted by and have put a lot of thought into is using the cash envelopes system.

What is the Cash Envelope System

Before you start using a cash envelope budget system you need to have a budget. There is a lot of information about budgeting on the site but for the purpose of this blog post what you need is to know what you can afford to spend each month on certain categories. For me the categories I want to get on top of are:

Groceries: This is the budget that we have the most control over and yet is the easiest to overspend on!

Fun Money:  In this category, I’m going to include everything from ice cream from the van that comes down our street to a magazine for Isla-Mae to the occasional coffee out.
Petrol: I’m keeping my petrol money separate because I seem to be spending more than I used to. Some of this is because the prices keep going up but I hope that by keeping it outside of the normal spending account. It might encourage us to walk more rather than use the car.

Other categories people tend to use might be gifts, takeaway, clothing, home items (i.e. new cushions rather than large appliances).

Every week or month you draw out the cash that you need for each category and put it in an envelope. You then spend only the cash in that envelope on what it is supposed to be spent on. Try not to borrow between envelopes. It is as simple as that. The reason cash envelope budgeting works is down to:

  1. You knowing and being able to see and hold in your hand exactly how much you have to spend on any given category.
  2. When you use cash you are less likely to want to part with it. This is true!

Ask For Small Change

When setting up your cash envelopes ask your bank for small change and a variety of notes. This way you are less likely to take out more than you need and blow it. What I mean by this is a quick coffee and catch-up date. You want to spend £6 (two coffees) maximum but take a £20 note. The chances are you will then be tempted by an almond croissant or maybe some biscuits. You might grab something from the bookshop on the way home. You can’t do that if you have left your debit card at home and have only brought £6 in change with you.

If Cash Isn’t For You

Not everyone wants to carry cash or have a month’s worth of spends sat in their home! From a security point of view, I’m not going to take a month worth of money out for my cash envelopes, just a week. If this doesn’t appeal to you, you could use a cashless envelope. Set up multiple accounts, each with a different debit card and use those for spending from individual categories. I think the cash idea would work better for me but it simply isn’t right for everyone and this is a good alternative.

In Conclusion

If you are someone who is trying to save, who wants to keep to a stricter budget or someone who simply knows that they need to cut back on their ad hoc spends this could be the perfect set-up. As before, this isn’t something I’ve tried but I’ve researched it heavily and it might be something that would work really well for us, helping me to save more and stopping waste!


Have you tried this type of cash envelopes budget control or money organisation? If so, let me know how you found it and let others know about any top tips you might have.


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