How I Got Started With The Cash Envelope System

We were lucky enough to be able to get started with the cash envelope system as soon as we made the decision to try it. I had some personal savings that had no real purpose. And I was willing to sacrifice it to get us started.

I’ve been tracking out spending since March using Google Drive’s budget spreadsheets. One for each month, then adding them to a yearly spreadsheet. The budget column isn’t really what has been budgeted though. It’s what I think is reasonable. Many of the amounts are actual because I know they are a fixed cost. But I wanted to be a bit more serious about the amount of money we were spending on some things.Google Drive Budget screenshot Life By Kathleen

Getting started with the cash envelope system

So on June 3, I went to the bank to take out $1,080 to get us started with the cash envelope system.

Groceries – $400 – anything purchased from the supermarket
Fuel (K) – $200 – fuel for my car and any personal incidentals like going out for coffee or taking my daughter to a play centre
Fuel (L) – $200 – fuel for my husband’s car and any personal lunches he wants to have
Outings/Takeaway – $100 – family outings like going to the zoo, and family lunch or dinner
Car Service – $80 – Now that I have thought about it a bit, I should probably include enough in here to cover the registrations as well. And I’ve also noticed that my license is up for renewal in August.
Birthday – $50 – I prefer to give money for birthdays, so this is just to stock up on $10 notes
Donation – $50 – I donated some money to a friend. This will not be a regular occurrence, so I don’t even have an envelope for this.
I also had some money already at home that I was using as an emergency fund. I have now separated it into a few different envelopes.
Emergency Fund – $1,000
Christmas – $200
Sinking Funds – $0

We are starting small, with only a few envelopes to see how we go. I’m sure it will take a little bit of time to get the amounts right for us.

What should we do with the leftover money?

We have a few options when it comes to any money left over at the end of the month. We could add it to the Christmas envelope. I’d really like to have about $500 in it. But I really think we will be adding it to Sinking Funds this time. And the first thing we will be using this for is my birthday next month. We are going away for a few days and while our accommodation is already covered, there are a few things we’d like to do that they Outings/Takeaway envelope just won’t be able to cover.
After that, I think we will continue to top up the Christmas envelope until it reaches $500.

What envelopes should I use?

I searched for a cash envelope template on Pinterest and finally found one I like. I was smart in that I only printed one copy to make sure it would suit my needs. And lucky that I did only print one! It was too small! A $20 note just fit inside the lines, before I had even cut it out and folded it. As much as I’d like to use pretty envelopes for this, they really aren’t necessary. So I decided to use plain old standard DL envelopes that I had in my drawer at work. If we stick with it I’d like to make some sturdier envelopes down the track.

Getting started with the cash envelope system


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