6 Cash Categories to Start Your Cash Envelope System

A cash envelope budget is a simple system of designating a part of your family’s spending as cash only. When getting started it can be confusing to figure out which cash envelope system categories to set. 

In today’s post I am going to walk you through the 6 categories you need to get started and show you how to figure out how much cash goes into each one. Everything customized to your family’s finances and unique goals. 


When figuring out how to start a cash envelope system you need these 6 cash envelope categories to get started. These will help you figure out how to use the cash envelope system and get started right away.


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Have You Tried Cash Before?

Kinda a funny question! Cash used to be the only option available for payment, but now it’s almost a foreign transaction. 

Maybe you’re thinking right now, “I’ve tried a cash budget before and it didn’t work for our family.” If that is you, yet you still have a hard time sticking to the budget, you need cash!

I do things a little different than most and so many of our Pearls are finding HUGE success doing it this exact way that I am going to teach you. 

Using a cash envelope system is supposed to make spending money inconvenient. You have a problem with overspending, remember?

Let me show you what cash envelope system categories I have found to be a perfect fit for families as they get started. 


What Gets a Cash Budget?

The main thing I do different is that spending categories only get a cash budget if you go in store to buy the product. 

So all those bills you pay online like your internet bill, can have a digital budget. Digital budget meaning you leave the money in your bank account allowing the bill to be paid online.  Things like clothes and groceries where you physically walk into a store, get a cash envelope. 


6 Cash Envelope System Categories to Get You Started


All you need to get started are 6 paper envelopes and you’re ready to go! If pretty things help you stay excited about the process, then you’ll love my printable envelopes you can find here.

Here are 6 cash envelope system categories to get you started. Once you get the hang of things you will be able to customize them based off what works best for your family.


1. Groceries

This category covers all food items you need to feed your family meals and snacks. If you are about to tell me that you do something like grocery pick up, you can try giving this category a digital budget. But if you can’t figure out how to stick to that, then convert to a cash budget and take your shopping list in store. 


2. Miscellaneous 

Miscellaneous is for all other household items your family needs. Things like toiletries, batteries, dog food, or printer paper would be things that fall under this category. 


3. Fun

You can use this cash envelope system category for any fun activity you have planned for the month. If you have plans for a movie night with hubby, this cash could be used for that. Eventually you might want to separate it into categories like eating out, babysitting, or date night. 


4. Clothes

Going out shopping for clothes for your family can quickly turn into an overspending disaster. The biggest tip for making sure this cash category covers all your needs (not wants!) is to set a realistic budget and PLAN! Shop the end of season clearance sales and buy a size or two bigger for next year. This will really help stretch those dollars!


5. Medical / Dental

Medical and dental expenses are the perfect example of an unplanned expense that you can plan for. This isn’t for your monthly insurance payments. This category will cover any co-pays waiting for you after you visit the doctor. These unexpected trips are unavoidable and you will be so grateful you have cash set aside ready to pay the bills when the time comes.



6. Christmas


This is the most fun cash category! As you set aside money every month for Christmas expenses, you are instantly relieving any financial stress that usually comes along with the holiday. Beautifully setting yourself up for a debt free Christmas! It also allows you to take advantage of sales on things like gifts that come along throughout the year. 


How Much Goes Into Each Envelope?

I’m not able to give you the exact figures on this one. In my quarterly budget updates I share our real life numbers of our budget to give you a real life example. But our finances aren’t exactly like yours. 

You need a customized goal based budget specific to your family’s finances and your family’s goals. When you have that in place you will know exactly what numbers to try in your cash envelope budget. 

So this is the part where things get a tiny bit more involved. You’ll need to first figure out what your goals are and then figure out how to turn those goals into financial action steps that can be worked into your family budget.

Did you just take a deep breath? Don’t worry! I can show you how to figure out this customized process!

I have put together a customizable step-by-step plan that shows you how to do all of this called The Better Life Budgeting System. This walks you through the exact series of steps our family took when we decided to living with the stress from our $20,000 debt.

It’s the system that allowed us to take control of our finances so we could be more intentional with the way we spent our money so we could do things like save up enough cash for our couples vacation to Costa Rica AND save enough money for a down payment on our first home! 

We used what I now call the Better Life Budgeting System. This is a real life step-by-step process that is 100% customizable for your family too! It’s how we broke down our goals into actionable financial steps and worked backwards to figure out what was Step 1 so we could get started and know we were making progress where WE wanted to go. 

If you want to learn how to start using the Better Life Budgeting System TODAY, I have a free online training that you can sign up for right now by clicking here. 


Let’s See Your Envelopes!

It’s time to take action! I don’t want you to wait and say “i’m totally going to do this…. Later” because that’s when you fall into the trap of not making progress. Time flies by and before you know it a year has passed and think of all the progress you could’ve done in the last year!

So go take action right now! Go start your envelopes! Even if it’s just writing the category titles on the envelopes. Go do it right now! To help hold you accountable, I want you to take a selfie and tag me on Instagram @PenniesIntoPearls. Promise you’re going to do that right now!

I can’t wait to see you taking the first step to creating a better life for your family! 


Talk to you soon! Xoxo



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