Not many people have a strategy to manage their money, and those who do, usually develop their own system. Having a system derived from another’s strategy, and tweaking it to make it work for you, is the key to managing your finances better. This is exactly what the video below shows us: a variation of the common cash envelope system – right inside her own wallet.

cash envelope system

So as the video shows, she divided her wallet into several categories such as Gas, Kid’s School, and Groceries, using index cards and Post-It notes. This gives her the chance to allot money to where it’s needed and where it should be, and therefore to avoid overspending in one category alone. The best part of it is that she can take it with her anywhere she goes, compared to using the regular cash envelope system where you’d leave the money in your home.

But why use it; regardless of whether if it’s the variation like on the video or just the usual cash envelope system?

Helps You Allocate Your Money Wisely

The envelope system works simply because it helps you decide where your money goes and how much of it. For example, if you have $2000 a month budget, you would decide what categories to use, and how much money you’ll put into each category. Now, it will only work if you follow the system; that is, you can not spend money on other categories, on expenses not related to it. So for example, money for gas cannot be spent for groceries, and vice versa.

It Gives You a Bird’s Eye View

With this system, you’ll see how much money you have left for spending for each category. So for example, you want to go shopping, and you see you only have $100 left for it, you can decide whether to spend all that and wait until the next month for the next allowance, or spread it until the last day of the cycle. This can help you make better spending decisions and can even lead to more savings.

It Builds Discipline

Discipline with money, whatever you do, is hard to achieve. But by using the cash envelope system, it can be a lot easier. Now that you’ll see how much money you have left, you would know your limits. And if you ever decide to touch money on another category for unrelated expenses, you’ll know that you will still suffer, and it helps you to make better decisions and avoid regret. Without this system in place, you are more prone to spending money for unnecessary expenses and will later be shocked that you have nothing left for important stuff such as food, gas, or your child’s needs.

Moves You Away From Credit Cards

The cash envelope system works primarily using cash and not plastic. Therefore, you are not going to pay credit card fees, interests and overdraft fees. Another benefit of staying away from plastic or credit cards is that you can easily avoid overspending which is the usual problem with using cards.


Managing money can always cause stress and pressure, but wise money management will always put you in a better position. This cash envelope system will work for smaller amounts and for your day-to-day living, but this may be harder for bigger amounts of cash, especially if you want to clear out debt or pay off a mortgage. It’s wise to always have a good foundation and someone who can give you expert advice when things get bigger and more complicated. For expert financial advice, you can always trust Paramount Financial and Business Advisors. Call us today at (678) 231-6140 to make your money management as easy as filling up your envelopes!

Image courtesy of Stuart Miles at

Certified Public Accountant Alpharetta, GA

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