When I was looking to get out of debt and help my young family get to the next level, I found a book called “The Total Money Makeover” by Dave Ramsey. This book broke down the complexities of building wealth, showed me the power of budgeting, and allowed me to feel empowered with my money. 

Almost 10 years later, my family is debt-free, mortgage-free and on our way to becoming millionaires before our 40th birthdays. If I didn’t find that book and Dave Ramsey’s envelope budget techniques, I’m not sure we would be in the strong financial position we’re in. 

One key tenant of Dave Ramsey’s budgeting practices is his cash envelope system. This simple yet powerful system helps you to stay in control of your money and make huge financial strides. Our family used the cash envelope system when we started out on our financial journey and it helped us to stay disciplined as we completed each of the Baby Steps

What is the Cash Envelope System?

A cash envelope system is a personal budgeting process that allocates a set amount of money to individual physical envelopes. Each of these envelopes is filled with real cash so when you’ve spent the amount inside, you can’t spend anymore. 

By using cash envelopes in this way, budgeters are developing a forced discipline with their cash flow planning. So if you want to hit a savings goal and you want to keep your spending in check, a cash envelope system might be for you. 

Read: What is the Cash Envelope System?

Dave Ramsey’s budgeting philosophies center in on the fact that “Cash is King”. He knows how powerful and tangible actual money can be so it’s no wonder he’s a big fan of the cash envelope system.

What type of cash envelopes should I have?

Choosing which line items in your budget should be designated for cash envelopes is completely up to you. There’s no one right way to budget and handle your money. 

When making this decision, it’s important to review which areas you typically overspend. If you find that you always go over budget by eating out at restaurants, that might be a great envelope to start with first. If you limit the physical cash available to you, then you’ll stop overspending because you won’t be able to!

Start by writing down a few of your spending trouble spots. Know that cash envelopes don’t work all that well for online purchases so categorizing Amazon for cash-only purchases will be pretty difficult. 

Here are some cash envelope categories to consider:


Food can be a huge area for overspending that may be holding you back. If you set aside a specific amount for groceries in cash, you’ll be surprised how much you’ll save even in the first month. 


Sometimes miscellaneous categories like Entertainment can go way over budget because it’s not specific enough. Entertainment can mean so many things! With a cash limit, you’ll know exactly when the fun starts and ends. 


Most everyone enjoys a new outfit. It’s easy to see why clothing can cause some major overspending. By making a plan at the beginning of the month and sticking to the cash you have, you can enjoy your clothes guilt-free. 

Other Envelopes to Consider

After analyzing your specific spending, you’ll get an idea of what envelopes might make sense for you. Here are some that our family has used in the past in addition to the ones mentioned above:

  • Date Night
  • Kids Activities
  • Kids Clothes
  • Andy’s Lunch Money
  • Nicole’s Lunch Money (Nicole is my wife FYI)
  • Andy’s Fun Money
  • Nicole’s Fun Money
  • Vacations

Do cash envelopes save you money?

Recently, Nicole and I did a month of cash envelopes after taking a break for a few years. The discipline of the cash envelopes helped us to save big time. 

The month prior we overspent on our budget by around $500. The main reason was we went on a vacation and spent way more than we planned. We had to pull money out of our savings account to cover the difference. 

The following month when we used the envelope system, we were $250 under budget. We were shocked at how much we could save by including a little discipline in our spending plan. 

The results speak for themselves. Dave Ramsey would be proud!

Dave Ramsey Cash Envelope System | Qube Money Blog
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What are the major advantages of a cash envelope system?

As I shared above, the cash envelope system can help you save money. If your income is tight or you want to hit a savings goal in the near future, using a set amount of cash instead of credit cards is a smart move. 

Here are some other advantages to consider:

Reduce Money Fights with your Partner

If you and your partner decide how much to spend before the month begins, then the envelopes are the system that enforces your decision. This way, you’re both sticking to the plan together. 

Make sure to include a “Fun Money” envelope. This will definitely help reduce money fights as well!

Curb Impulse Online Purchases

It’s so easy to buy things that you want online. At the click of a button, new clothes, electronics, and even food can be delivered to your door in what seems like no time at all. That privilege can also be a major cause of overspending. 

With smart budgeting and cash envelopes, you’ll avoid the temptation that comes with online shopping. 

Makes You Consider “Needs vs. Wants”

When you’re using cash envelopes and you’re spending real cash, you’ll find that you’ll double-check each purchase you make. I definitely found this to be true!

For example, when we had our “groceries” envelope with only $50 left, my wife and I decided to do a “refrigerator challenge” instead of going to the grocery store at all. We riffled through our fridge and pantry and found that we could make enough meals for our family with what we already had. 

Read: My Food Budget is Out of Control

Going to the grocery store that day was more of a want than a need. And we saved money and reduced our food waste by staying home and using what we already had. 

What are some disadvantages to consider?

While the advantages of using the Dave Ramsey cash envelope system are plentiful, it’s always good to look at both sides. If you’re not used to spending physical money, this new cash-only plan can be a real jolt to your typical daily routine. 

Cash Isn’t Accepted Everywhere

While there’s debate about the US becoming a cashless society or not, during our month of using cash envelopes, I did find that cash isn’t always welcome. 

I like to get my gas at Costco and unfortunately, they only accept credit or debit cards. Perhaps they want us to move quickly in and out of line!

Read: 10 Disadvantages to Using Cash

Also, I found some parking meters only accepted plastic. This little hiccup caused me to temporarily break my plastic-ban for the month. 

Holding A Lot of Cash Can Make You Feel Uncomfortable

Depending on your monthly budget, it can be nerve-racking holding onto thousands of dollars of cash. The fear of losing it or someone stealing it took a hold of me and my wife during our month-long experiment. 

With credit cards, your provider can reverse charges after your card is stolen and if your card is stolen, it’s difficult for thieves to even use your card. You can’t say the same for cash.  

Tracking Spending is More Difficult

If you’re used to tracking your money through a budgeting app like Qube Money, going to all cash can add a lot of homework onto your plate. You’ll need to track your spending more diligently because you won’t have the convenience of your transactions automatically being synced. 

Now, if you’re good at taking notes, keeping receipts and using the envelopes exactly how they were intended, then it might not be that bad. 

Is a Cash Envelope system right for me?

According to Dave Ramsey, cash envelopes will help you control your spending and achieve your financial goals. Since Dave Ramsey and his company have helped millions improve their money situation, I think there’s no denying that this budgeting system works.

If you’re looking to eliminate debt, build up your emergency savings and become in control of your money, trying a cash envelope system could be a smart move for you. 

Coming from someone who has recently tried out the Dave Ramsey cash envelope system, I’d highly recommend trying it out for 2 or 3 months and seeing what results you have. If you find that your spending doesn’t change that much versus using your debit or credit card, then go back to your typical plan. But if you find that you’re saving more, eliminating more debt, and feeling more confident with your cash, keep at it!

A great hybrid approach between the Dave Ramsey cash envelope system and using credit cards is Qube Money’s system of using real cash through a debit card. Click here to learn more about how Qube Money can help you achieve your goals and eliminate the disadvantages that can come with using cash.