How to Make the Cash Envelope System Work For You

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If you’re trying to pay off debt and control your spending you’ve probably heard of the cash envelope system. It’s the act of putting cash in envelopes and only spending what’s in those envelopes. Those little envelopes keep you from overspending because when the money’s gone you’re cut off. 

While some people are obsessed with it, others just can’t make it work. I was one of those people who couldn’t make it work.

I’m all about efficiency so the idea of heading to the ATM every week or month and going inside the gas station to pay for my gas didn’t appeal to me. But I secretly always wished it would work because sometimes I can’t be trusted with self-restraint. 

Budgeting is a great start but you need tangible limits to follow through with it when you’re in the real world. So if you’re like me, I want to share with you a few ways you can make the cash envelope system work for you if the traditional method is a little too restrictive.

This article is sponsored by Qube Money. While I was compensated for writing it, all opinions are 1000% my own and I retain all rights to updates in the future.

How To Start Cash Envelope System & Customize It For Your Needs

Before you start cash envelopes, you need a budget. A cash envelope system is not a budget.

I repeat: A cash envelope system is not a budget!

You need to make a zero based budget first then use the cash envelope system as a tool to follow through with the amounts you’ve budgeted.

Once you have a budget there are a few ways to customize the cash envelope system to meet your needs.

Only bring what you need

Bringing your whole grocery envelope on your first grocery trip of the month is asking for trouble. So start out by bringing only the cash you need for the day.

When you’re budgeting, write down how much you will need for individual trips to the grocery store, Target, Starbucks, etc, and only bring the cash you need with you when you leave the house.

If you want to carry cash and have a lot of envelopes, this is the easiest (and safest) way to do it.

Digitize it

Idea of carrying a day’s worth of cash still not appealing? You don’t have to carry any cash if you use a cash envelope budgeting software or app. There are several options for virtual envelope systems but the most comprehensive one I’ve found is Qube Money.

What makes Qube the best choice for a digital envelope system is that it’s not a budgeting app. It’s an FDIC insured bank account that allows you to distribute actually money to digital envelopes, called Qubes. So you make your budget, transfer cash to your Qube account, then distribut that cash to your Qubes. 

When you sign up for Qube Money you’ll get a debit card and that’s what you’ll use when you want to spend money in a Qube. It even provides similar impulse spending barriers like an envelope would by requiring you to authorize a transaction in the Qube app before a purchase can be made.

As far as “stuffing” your Qubes goes, you can set up a recurring transfer or do it manually. Recurring transfers, called Budget Planning in the app, can be added to your remaining balance or you can “top off” the balance to be at a certain amount. At the end of the month you can choose whether you want any extra cash to roll over or transfer to a different Qube (maybe one for extra debt payments?) 

Qube has a few premium subscription options but its free version really gives you everything you need:

• 10 Qubes
• A debit card (you can choose white or a pretty blue/ green ombre)
• A mobile wallet
• Free peer-to-peer transfers

You can even use the Qubes as sinking funds for larger expenses like vacations and spend directly from the Qube (so you’re sure to not go over budget while you’re vacationing!) The only thing to note is that there’s no high-yield saving option, like One Finance’s 3% auto-save, but that feature is coming in the future. But really, the money in your cash envelopes isn’t meant to sit there gaining interest, it’s meant to be spent!

So if you’re looking to minimize your cash on hand or do a lot of online shopping, Qube is the easiest way to do the cash envelope system. Qube Money is brand new so go sign up now at Qubemoney.com to get on the waitlist and you’ll be notified when it’s accepting more users. 

Use gift cards

If you’re travel hacking with credit cards you may feel like using cash or a debit card is a missed opportunity for those sweet sweet points.  In that case you can use your credit card to buy gift cards to different stores. That way you get the restriction of a spending limit while accumulating points on your card.

You can get even more savings if you can find discounts or cash back on gift cards at Raise. (You can use this link to get $5 off your first discounted gift card purchase at Raise!)

Only use it in trouble categories 

How many times a month do you overspend on gas? For me I can say it’s zero. Yet some people insist on having a “Gas” envelope. If you’re looking for a manageable way to execute a cash envelope system then try it for just two or three categories that you consistently overspend in.

Our pediatrician actually told us to only work with Kai on two bad actions per month so I feel like she would support you doing the same with your overspending. This is a great method if you want to carry cash but don’t want a lot of envelopes to stuff.

The Cash Envelope System is Another Tool in Your Toolbox

The cash envelope system isn’t the answer to all your impulse spending problems. There’s a lot more to unpack there. But with any habit you’re trying to overcome, it’s nice to have as many tools in your toolbox as possible.

Whether you’re using cash, a Qube account, or gift cards, I recommend trying the cash envelope system. Find a way that works for you and see how much money you can save with just a few self-imposed limits!