How To Budget Using A Cash System

August 14, 2013

If you have trouble spending with credit cards, here's how to budget using a cash envelop system.

Budgeting can be overwhelming for most of us, but luckily, there are female entrepreneurs out there that know how to make it not only easy, but cute too!  I recently connected with Sarah, creator of the Etsy store, MissMoneyBags, who handcrafts budgeting wallets designed for those of us using the cash system.

Since I admitted last month that I’m horrible at budgeting (but want to get better!) I enlisted her help to teach us all a bit about using cash envelope systems as a tool to make budgeting easier.  She’s guest posting today about her awesome handmade wallets and using the cash envelope for simpler (and cuter) budgeting!


Cash Budgeting With An Envelop System

I love to create! I come from a long line of creatives and married one, too.  I grew up playing with toys made by my grandads, in pajamas made by my mom under quilts made by my grandmas, and slept in the bed my dad built.  Frugality was more of a creative thing than a financial one.

My husband and I have lived frugally our entire marriage of 11 years. He’s the practical nuts and bolts of our team, the blue in my rainbow.  We have 4 kids now. We are master “bootstrappers”,  lemon to lemonade type of people.  We’ve always followed a cash budgeting system,  but it  didn’t seem like we were making ground in the beginning.

My parents had just finished a financial class by Dave Ramsey that  teaches people to use a cash envelope system for budgeting.  My mom is a super cute, fashionable lady.  She was using this boring wallet with paper envelopes.  I decided to save up birthday money to make her a pretty replacement. I made my first wallet out of scraps from my house as a trial run. It was pretty good, but I knew I could do better.  I gave that one to a friend, and started over, changing textures and durability. The next round was amazing! It had this aura, that I was on to something special!

I used to feel stressed buying the kids new clothes, or even getting extra groceries.  No one put the stress on me, I did it to myself. Since we’ve been using the Miss Money Bags cash system wallet, I can literally look inside and see that we have the money for things like clothes. I can see it is there, and when it’s gone, it’s gone.  No big deal.  Each month, my husband and I communicate about our needs for that month and what money should go where, then get the cash. Any wrinkles we might experience have been ironed out ahead of time.  Ahhhhhhh. Sweet relief. It’s a team effort. And we are getting somewhere together!

I am inspired by Miss Money Bags because it is a beautiful sign to me that we are doing something special financially, we are going somewhere unique to us, we are creating a life of blessing, being proactive, changing the world. Really.  And so can you!


Here’s how to use the cash envelope system with a wallet:

– First, do your budget!
Decide what you need and what money you have to work with. Think ahead. It takes a few months of practice so if you mess up the first time, it doesn’t mean it won’t  work. It means you have to work to get there.  You don’t run a marathon the first day!

When you budget, you assign a job (some to spend, save, and give) to every dollar that comes in for the month.  Once every dollar has been assigned, decide which budgeted items will be cash spending.  The rest of the money that is not allocated to cash stays in the bank for electronic payment, like bills, gas, house upkeep, and so on. If you don’t use all of the money you budget, next month you will need to adjust so that each dollar has a job.


-Pick categories for cash that are typically difficult for you to manage, places you splurge:
Mine and his (this is cash for each of us to use or save as we like. Isn’t this great?! )

-Keep the rest of the money from the budget in the bank, the bills, gas, home upkeep, and so on.

Now I’m making all kinds of products for people! I make kids wallets with separate pockets to give, save, spend.  Teach them early!  I make refillable journals for people to be good stewards of their hearts. I make keychains for people who are going somewhere.

How To Budget With The Cash System…Hint- A Cute Wallet Helps!


Some super helpful tips on the cash system:
Dave Ramsey’s book, The Total Money Makeover, gave us practical tips on how to become debt free:  My Total Money Makeover
Robert Morris’ book, The Blessed Life, helped us grasp the urgency to be debt free:  The Blessed Life
Sara Janssen’s blog featuring Miss Money Bags really captures the simplicity of this budgeting idea: Walk Slowly Live Wildly

A note from Shannyn:  I absolutely LOVE these cash wallets- they’re cute, functional, budget friendly and handmade.  Huge thanks to Sarah from Miss Money Bags for this great budgeting tool and for showing us how to use them properly! 

20 comments so far.

20 responses to “How To Budget Using A Cash System”

  1. I love this idea! The wallets are so cute! Good job Miss Money Bags!

  2. Shauna says:

    So smart! Definitely going to teach this to my son for college (perhaps with a different wallet!).

  3. I’m a Davette(Dave Ramsey) also. I try to follow his principles but it has been hard lately because of cash flow problems but it does work.

  4. I’m a Davette(Dave Ramsey) also. I try to follow his principles but it has been hard lately because of cash flow problems but it does work.

  5. Brittany Ritchey says:

    I love mine and hoping to get one for a friend who could use this!!!!

  6. Kassie Carrell says:

    I love these! I need these! This would be a great gift for some of my friends that follow the Principles in the Dave Ramsey book. I read all the books that were mentioned and I especially liked The Blessed Life. Thanks for sharing your tips on budgeting. Sarah I have seen your etsy shop and all the cute things you posts from time to time on FB or Instagram. I love your style girl. Everything you make puts a smile on my face. Cute cute stuff! Keep in creating! Kass

  7. I have seen these wallets up close and personal and let me tell you, they are constructed so well! Not only do they showcase cute fabrics, they are pieced together intricately and flawlessly. You can tell that love and thought goes into every detail. I for one would love to switch to a system like this, especially with such a fashionable tool to motivate me!

  8. Becky says:

    I love love my Miss Money Bags cash wallet! It makes me feel trendy, pretty AND helps me stay fiscally responsible. And that’s a win-win. Great job Sarah!

  9. Abigail says:

    WOW! This is such a cute/practical idea. I might have to budget one of these wallets into my next month!

  10. These are adorable– practical and yet so fashionable! This will make sticking to my budget much easier. Thanks for sharing.

  11. Michele says:

    Ooooh, those bags are so cute!!!

  12. So creative!!! I really like the envelope system, but I think my wife would really feel embarrased busting out her purse with a bunch of basic office envelopes with permanent marker on them.

    Nice idea, I’ve forwarded this to her. 🙂

  13. Joanna says:

    such a fab idea

  14. Kristin says:

    I wouldn’t have thought of making a special wallet like that to help with budgeting. I wonder how hard it would be to make a wallet similar to that. Thanks! <3

  15. ayesha says:

    I think one should give priority to cash rather than credit unless they have a good memory and good self control.

  16. Caitlin says:

    I LOVE this! I’ve been following Dave Ramsey’s cash envelopes system, but was having trouble making it work with my current wallet (I was color coding with paper clips- not the best route). I am definitely going to get something from this adorable Etsy shop- thank you for this post!

  17. Parthenia Jones says:

    This could be an interesting gift to my ladies 🙂


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