Cash Envelope System

Definition: The cash envelope system is a budgeting method where you allocate cash into labeled envelopes for specific spending categories, such as groceries, dining out, or entertainment. Once the cash in an envelope is spent, no more money can be used for that category until the next budgeting period.

Example: If your monthly grocery budget is $300, you would withdraw $300 in cash and place it in an envelope labeled “Groceries.” You would then use only that cash for grocery shopping throughout the month.

Learn More:

• Read our step-by-step guide to using the cash envelope system and sticking to your budget.