How to Use Cash Envelopes without Cash

cash envelopes without cash

Use the Cash Envelope System without cash

The cash envelope system is an amazing tool to have in your budgeting toolbox.

It is one of the best ways to help you stay within your budget each month. And since you are staying in your budget, your are able to better work towards your financial goals.

Using cash envelopes are a big budget saver. Followers of Dave Ramsey will know he is a big proponent of the cash envelope system.

But what happens if using cash just isn’t feasible for your life? Or what if you are scared to carry that much cash around with you?

What if you want to do the cash envelope system but without cash? Is that even possible?

Trust me, I get it.

When we were paying off Mr Dentist’s student loans, we actually DID NOT use the cash envelope system.

We bank at a major national bank and our closest branch was in the next town… 30 minutes away!

Did I mention we lived in a small town (that we loved) but that was in the middle of nowhere?!

So, I’m sure you understand, that I did not want to drive 30 minutes away, every time we got paid, to pull out cash.

Our three children were very young at the time and it just was not feasible for our life.

The solution? Cash envelopes without cash! Yay!

How to Use the Cash Envelope System without Cash

The basics to using cash envelopes without cash are really the same as using the system with cash.

But it is important to get your foundation set. So we will lay out how to use this budgeting trick for best success.

RELATED ARTICLE: How to Start using the Cash Envelope Budgeting System

Create Your Budget

Yep! A cash envelope system, with or without cash, is useless unless you have a working budget for your finances. 

If you haven’t created a budget yet, it is time to buckle down and get started.

Here are some helpful articles about getting started with your budget:

Beginners Guide to Budgeting in 4 Easy Steps
How to Budget when Money is Tight

Choose Envelope Categories

Once you have your budget set and working for you, it will be time to choose which categories you want to use as your envelopes.

You want to make sure to use categories that could normally be used for cash. So any category that involves paying for things when you physically go into the store.

Some ideas for these categories are:

-Groceries
-Clothing
-Eating out
-Fun
-Miscellaneous

The idea is that on payday, you would pay your regularly scheduled bills through automatic or online payments.

Any money that you would have taken out as cash, you will instead set as your budget for your cashless envelopes, and use a cashless envelope tracker.

Track Your Spending

Keeping track of where your money goes is always important for a successful budget.

However, when you aren’t using cash to help monitor your spending, tracking is going to be even more important for success.

You will need to use a Cashless Envelope Tracker. So, instead of carrying around envelopes of cash, you will carry around envelopes with trackers inside.

Every time you spend money from one of your cash budget categories, you will mark the transaction on the tracker and update how much you have left in that budget for the time period. 

Don’t cheat and just collect receipts and never record the expenses. This will not help you.

You need to track every dollar so you know where it goes, when the category budget runs out, and so you don’t run over budget.

When the budget runs out for a category, you have to stop spending money in that category. The money is gone, just like if you were using cash to pay for things.

Don’t cheat. If you find you need to cheat often, it is time to re-evaluate your budget limits and perhaps add more to the problem category.

Benefits of Using Cash Envelope method without cash

Even though the cash envelope system is awesome, there are some benefits to using the cash envelope system without cash

As I mentioned before, doing a cashless envelope system is great if you live too far away from your bank to make getting cash out regularly feasible. We lived 30 minutes away from our closest branch. Others live even farther.

Some people do not live in very safe neighborhoods and wallets (with a week’s supply of cash) can end up disappearing. Switching to a cashless system will solve the anxiety around carrying large amounts of cash with you.

Furthermore, when going cashless, you can still use your favorite rewards credit card.

As long as you are being careful, tracking every expense, not going over budget, and paying off that credit card each month–then this is a great bonus!

I will admit that we love to collect cash back for using our credit cards for everyday expenses.

Final Thoughts on using the Cashless Envelope System

I will admit, using the cash envelope system is an amazing way to stay on budget and help pay off debt.

But using cash doesn’t always fit into everyone’s lifestyle. Thankfully you can still find success by using the cash envelope system without cash.

Do you prefer to use cash or go cashless? And why?

Let me know in the comments below.

How to Use Cash Envelopes without Cash

how to do the cashless envelope system

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