Cash Envelope Budgeting’s Pros

The cash envelope technique has been around for quite some time, but has recently gained popularity because to the work of financial guru Dave Ramsey. We’ve spent a lot of time explaining the benefits of the cash envelope way of budgeting, but it may be hard to persuade budgeters who are used to using cards to switch. So, let’s go further into why the cash envelope budgeting approach is effective and how it might help you reign in your spending.

Let’s start with the most objective question first: does any of this ring familiar to you?

  • You’ve made a budget, but you never seem to be able to keep to it.
  • You believe that you generate sufficient funds, yet you are unable to account for their apparent disappearance.
  • Despite your best intentions, you find it increasingly easier to just put all of your purchases on a credit card and convince yourself, “I’ll sort it out later.”
  • It’s difficult, if not impossible, for you to keep track of how much money you spend on each transaction.
  • No one ever knows for sure how much money is still left over in the budget.
  • You make an attempt to restrict your spending, but really what you’re doing is crossing your fingers that every pay period, you’ll be lucky enough to keep your expenses below your income.
  • Since you don’t have a budget, you find yourself holding your breath and praying to the financial gods every time you use your credit card a few days before you are paid.

If reading this list seems like financial harassment, a Cash envelope system budget may be the answer to your problems. We acknowledge that visiting ATMs and stores in person is inconvenient, but this is the point. Making purchases so effortless that people may empty their bank accounts in a few short days is not practical. Budgeting using cash envelopes works because it helps you see your finances in a tangible way and grounds your spending in reality. Consider the following benefits that have been linked to sticking to this time-tested budgeting strategy:

Budgeting using cash envelopes and its benefits

Because of this, people tend to believe that money exists. This is the cornerstone of the cash-envelope budgeting approach, as was just emphasised. It may be difficult to see how much money is being taken out of your account each time you use a credit or debit card. It’s easy to spend a lot of money on a credit card without giving much thought to it since it doesn’t seem like real money. Having physical currency in one’s hands and being able to see it go when it is spent helps the brain understand money for what it is: a scarce resource that needs to be handled carefully and conservatively. It teaches you to be careful with your finances by making you aware of where and how you spend your money.


When you depend on plastic for your livelihood, it’s easy to lose track of where your money is going. Maybe you think it’s OK to spend $150 every two weeks on amusement, but then you realise you spent it all in a single weekend. If you sit down and create a rough budget, you could think that it’s just right. Using cash envelopes as part of your budgeting strategy can make you more mindful of every dollar you spend.

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