How to Use the Cash Envelope System Without Cash

The cash envelope system makes your budget come to life in a visual and tactile way.

 It helps you see your budget at work and how much money you have to spend with the help of envelopes and cold, hard cash.

The basics are this: you use one paper envelope per budget category. On payday, you get cash and stuff each envelope with the amount of money that is earmarked for that category. 

When the envelope is empty, you stop spending. Most of us aren’t used to using actual dollar bills and coins. Secondly, many stores prefer cards over cash. 

Is a cashless system still effective? (using debit cards, not credit cards)     If the point of budgeting by envelope is to rein in your budget with actual segmented cash, won’t debit cards defeat the whole purpose?

Beginning Budgeters:

If you are just starting out with budgeting, I would recommend using the standard envelope budget system until you get the hang of things. There is something about seeing your money in envelopes (or lack thereof) that helps reinforce the need for this strict method of budgeting.

The cashless version of the envelope system is not a good choice for over spenders UNLESS you are very detail-oriented and vigilant. Most debit cards have overdraft protection so it could get expensive if you aren’t careful to stay within your budget.

Over spenders:

Final Thoughts on the Cashless Envelope Budget System

The envelope budget system is an amazing strategy you can use to get the pulse of your spending. It puts you in the driver’s seat of your spending instead of in a reactive position.

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