Best Cash Envelope Categories For Beginners in 2024
Cash envelope categories can help you gain control over your money. If you are looking to set yourself up for success or have a stronger system for saving, then a cash envelope system is a great thing to use!
First, what is the meaning of a cash envelope?
Now, you might be wondering, what is a “cash envelope”?
The cash envelope system is when you split your budget into cash envelopes. Each envelope has a category and at the beginning of your week or month, you put the cash you have to spend for that category into the envelope.
Are there benefits of cash envelope categories?
You bet! Having your money in cash makes things tangible. Unlike using a card, parting with your cash is a lot harder to do! You will be less likely to purchase impulsively, be aware of your spending, and stay on track – crushing your financial goals in less time.
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What if a full cash envelope system is overwhelming?
Have no fear! You don’t have to use envelopes for your entire budget. You can set up budget envelopes for those categories that you tend to overspend in. In fact, this is the most manageable way to do it!
What cash envelope categories should I have?
Here are the top 5 cash envelope categories that can help you with extra spending.
1. Eating Out
Do you spend more than you’d like at restaurants? Put your cash in for the month and only spend what’s in it!
2. Groceries
We spend a lot of money on food. And while it is necessary, this category can be a big issue if you never look at prices or struggle with impulse purchases. Improve your grocery spending by making this budget category tangible.
3. Fun Outings & Entertainment
Especially if you have kids, fun outings add up! So, make an envelope for all the great things you want to do. And to make the cash in this envelope go farther, check out these great cheap things to do on a budget.
You won’t even miss the expensive stuff!
4. Gas
You have to power your car. But you also have a lot of flexibility on how you do this. Put the cash in your envelope, then look for cheaper gas stations or transportation alternatives like walking, biking, and carpooling.
5. Personal Care
Haircuts, makeup, coloring, and salon visits can eat up huge amounts of money. But if these bring you joy, you don’t have to get rid of them. Just allot the amount that you want, and use your envelope to spend only what you’ve accounted for.
Pro Tip: Break your budget down as much as possible so that you know exactly what the money is for. For example, if you always overspend at the salon, make an envelope specifically for these visits. You can only spend what you have!
How to Start With The Cash Envelope Categories
1. Select your categories from Above Or Below
Use the most popular categories above, or choose from more in the list below.
2. Decide on your budget
Next, look at your after-tax income and how much you have to spend. Check out these budgets to help you create one that works for you.
- Zero based budget template: this budget method evaluates every dollar!
- Percentage Based Budgets like the 50 30 20 template or the 70 20 10 template give you flexibility.
- Reverse Budgeting: a great budgeting concept for paying yourself first
3. Collect What You Need & Label
Grab the cash and envelopes. Then label each envelope with the category and amount of cash you have.
As you spend the cash, write on the envelope the amount you have left. This way you can look at your envelope at any time and know how much you have left to spend.
4. Stick To Your Budget
This is the most important part!
Stay motivated by writing out your big beautiful goals. And see the tips at the end of this article for help sticking to your budget!
Pro Tip: Envelope budgeting works best for those categories that include physically walking into a store. Online purchases don’t work as well. You can still do it, but it’s not always easy.
More Cash Envelope Categories
Next, here is a list of all the other budget categories you can use for envelopes if you are turning your entire budget into a cash envelope system.
Choose the larger cash categories, or divide your envelopes between the smaller subcategories within – it all depends on how much you spend and where you spend it.
Housing
6. Household Repairs & Home Improvement Projects
7. Household Maintenance (yard services, HVAC yearly maintenance visits, pest control, etc.)
8. Tools, Lawn & Garden Supplies
*You can also include rent or mortgage in this category if you choose.
Transportation Cash Envelope Categories
9. Car Payment
10. Car Repairs & Maintenance (new tires, oil changes, inspections, car washes, etc.)
11. Public Transportation Costs
12. Extra Car Supplies (trashcan, cup holders, etc.)
13. Parking Fees, Tolls, Parking Tickets
14. DMV Registration, Car Insurance
Basic Utilities
15. Electricity
16. Water
17. Trash / Recycling
18. Gas
19. Sewer
20. Phone Bill
21. Internet Bill
Insurance Expenses
22. Health Insurance
23. Dental Insurance
24. Vision Insurance
25. Life Insurance
26. Other: Long-Term Care Insurance, disability insurance, malpractice insurance, liability insurance
Medical/Healthcare Cash Envelope Categories
27. Prescriptions
28. Doctor Visits
29. Dentist Visits
30. Eye Doctor Visits
Debt Payments
Use a cash envelope system to help you pay down debt faster than you thought possible. It feels great to see your cash in action.
31. Credit Cards
32. Student Loans
33. Car Loans
34. Personal Loans
35. Medical Bills
36. Extra House loans
Savings/Investing
Cash envelopes can also be for saving money instead of spending it!
37. An Emergency Fund
38. Saving for Retirement
39. Saving for College
40. Additional Saving or investing (for a house, car, vacation, real estate purchase, etc.)
Related: Investing Facts You Should Know
Food Envelope Categories
Aside from restaurants and groceries, you may need to account for these additional food purchases.
41. Holiday and Celebration Food
42. Grub Hub, Insta Cart, and other grocery service fees
Necessity Budget Items For Home
This category can be all in one, but here’s a breakdown of the different types of things that would go in the envelope.
43. Paper Goods: paper towels, toilet paper, plates and utensils, kleenex
44. Baby Stuff: Diapers, wipes, formula, feeding supplies,
45. Cleaning Supplies, Dishwasher Detergent & Soaps, Laundry Detergent
46. Hygiene Supplies: Deodorant, Soap, Hairbrushes, Shampoo, etc.
47. Basic Tools For Your Home
48. Miscellaneous Household Items (printer ink, stamps, new glasses to drink out of)
Related: Needs Vs. Wants Examples For Your Budget
Job-Related Expenses
49. Childcare
50. Office or Work Supplies
51. Journals, Magazines, Subscriptions For Work
52. Extra Travel Expenses
53. Continuing Education
54. Work Uniform or Clothing
Personal Expense Envelope Categories List
55. Gym Memberships
56. Hair Cuts, Styling, Coloring, Salon Visits
57. Alcohol
58. Makeup
59. Clothing, Shoes, Accessories
60. Vitamins & Supplements
More Entertainment
This category is large. So, if you spend a good deal of money in more than one subcategory below, you could make separate cash envelopes for each one.
61. Movies (in the theater or at home)
62. Concerts and Sporting Events
63. Books
64. Bars/Clubs/Restaurants
65. Outings With Friends
66. Cable or TV Streaming Servies (Disney, Netflix, Hulu, etc.)
67. Supplies for Hobbies (camping gear, etc.)
68. Other Subscriptions and Memberships (Audible, etc.)
69. Vacations (Grab our free vacation saving challenge)
70. Casinos
71. Toys & Outings For Kids & Families
Giving Envelope Category Examples
72. Gifts
73. Christmas, Other Holidays
74. Donations
Related: Christmas Money Saving Challenge Pdf
Kids Activities And Education Envelope Categories
75. Babysitters
76. Extracurricular Activities
77. Supplies for Activities (soccer socks, cleats, swim goggles, etc.)
78. Books and Supplies for School (+ beginning of the year fees)
79. Healthcare-Related Expenses (glasses, braces, etc.)
80. Kids Haircuts
81. Teacher Gifts (Find affordable thank you gifts)
82. School Pictures and Other Miscellaneous School Costs
83. Birthday Gifts for Friends
84. Allowance
85. Kids Clothes and Shoes
86. Lunch Money
87. Summer Camps
*Teach kids to make their own money and manage it too. See these budgeting for kids tips!
Cash Pet Related Envelope Categories
If you have pets, you know that they can cost more than you’d think.
88. Pet Food
89. Pet Medications
90. Kenneling and Boarding
91. Veterinary Bills
92. Grooming Fees
93. Pet Sitter / Walker
94. Pet Training
What is an example of a cash envelope budget?
Let’s say your monthly budget is $4000, and you decide to put $150 of this toward gas. Take out the cash and put it in an envelope labeled “gas.”
Now, whenever you get gas during the month, you take the money out of this envelope and write on your envelope, marking how much you have left in the envelope to spend.
More Quick Pro Tips For Using Your Cash System
In order for this system to work, you have to stick to your budget. These tips will help:
- Only bring the amount of cash you know you’ll need with you. Leave your debit and credit cards at home.
- Keep track of your spending on the envelope as you go.
- Adjust your categories as needed. You may find that one is too large or too small. Tweak it the next month!
Most Common Questions And Answers
Here are other great questions that get asked a lot about cash envelope categories!
How do you organize cash envelopes?
I advise that you put your cash envelopes in a binder or drawer that is out of the way. You don’t need cash sitting around tempting you!
Then, when you are going somewhere you know you’ll need it, only take out the amount that you know will cover you. This will help stem impulse buys later.
Is there a downside to the cash envelope system?
It can be inconvenient to use cash for something that you typically pay for online. That’s why this system works best when you are physically paying for something.
What if you do overspend?
It happens. And when it does, you take money from a different envelope to cover.
Then, reevaluate. Perhaps you need more money in that category in the future. Or you need to take extra steps to keep from overspending in the future.
Is Cash Stuffing The Same As Using the Envelope System?
Yes. Cash stuffing has become popular on video platforms, but it is the same thing as using an envelope cash system.
How often should you withdraw cash from your envelopes?
However often you need to spend the money in the envelope. Some categories, like groceries, will be used much more than others.
Can you use it for emergencies?
Ideally, you should have an emergency fund set up to take care of emergencies. The cash envelope categories take care of your monthly budget.
How many envelopes should I have?
This is a great question and the answer is personal to everyone. If you don’t want to keep track of a lot, only make 2-3 categories for the budget areas you are trying to get better control of.
If you are ready to go all in with cash, then make as many cash envelope categories as you need to take care of your entire budget.
What does an envelope include?
Each envelope should have the cash you are spending that month (or week), the category label, and the amount of cash written on the outside of the envelope.
What if I run out of money? Can I take from other categories?
Yes! If you run out you can move money from one envelope to another. Just take note if you do this often. You may need to adjust your budget categories and amounts.
What if there is money left over at the end of the month?
Wahoo! Good for you!
If you have money at the end of the month, here are a few great places to put it:
- Build up your emergency cash
- Pay debt off even faster
- Save or invest (even investing small amounts builds over time!)
- Put it towards one of your money dreams, like a beautiful vacation
To Consider With Cash Envelope Categories
Having categories and cash envelopes are a great way to save money without feeling like you’re on a strict budget. It brings about a new level of awareness.
And with all things, if you know better, you do better.
Are you loving the envelope idea? Try our 100 day envelope challenge chart!
Leave a comment and let us know how your cash envelope system is doing!
