How Many Cash Envelopes Should You Have for a Budget?

Using the envelope system helps you stick to your budget.

Everything but Regular Bills

Designating an envelope for everything that could be a cash expenditure is one way to ensure sticking to your budget. The funds for all regular bills paid by check, debit card or automatic withdrawal are left in your bank account and paid as usual. All remaining budget items get their own envelopes, whether that's three or 15.

Only Food and Miscellaneous

If having so much cash available to you at once makes you nervous, or if you tend to spend the cash you have on hand, creating envelopes for just a few risky line items may be a better idea. Food/groceries and miscellaneous are frequent budget busters for most people, and envelopes are always recommended for these.

Bottom Line

The envelope system was designed so you could monitor your entire cash flow. But if it is too cumbersome or too tempting to "borrow" from other envelopes when you to have so much cash on hand, at the very least, use the envelopes for food, "fun" money and entertainment.

References

• Dave Ramsey: Dave Ramsey's Envelope System
• Crown Financial Ministries: Envelope Budgeting in a Cashless Society

Resources

• Crown Financial Ministries
• Dave Ramsey
• "Debt-Free Living"; Larry Burkett; 1989