Cash envelope categories: a practical starter list
Start with three to five variable categories where a hard limit would change your spending. Common cash envelope categories include groceries, dining out, gas or transit, household supplies, personal spending, entertainment, clothing, kids, pets, gifts and miscellaneous. Choose from the list; do not create an envelope for every item.
Cash envelope category list
Variable essentials: groceries, gas or transit, household supplies, pharmacy, kids and pets. Flexible spending: dining out, coffee, entertainment, personal spending, clothing, beauty, hobbies, gifts and miscellaneous.
This is a menu, not a checklist. Start with the category that repeatedly runs over, then add only the ones where seeing less cash would make you choose differently.
Choose categories from your own spending
Look at the last two or three pay periods and mark variable purchases you could reasonably limit. Group tiny labels that compete for the same decision: coffee and takeout can both live under dining out; movies and games can both live under entertainment.
Run the small set for one full pay period before adding another. If two envelopes always borrow from each other, they may be one category in practice.
What doesn't need an envelope
Anything with a fixed amount and a fixed date. Rent, insurance, subscriptions, loan payments. These don't need a spending limit because you aren't deciding anything — you just need the money there on the day.
Cash envelopes are for the spending where the limit changes your behavior.
How much to put in each envelope
Start with the amount you can afford after bills, savings and required debt payments — not a universal percentage. Use recent spending as the first estimate, then lower the categories you are intentionally trying to change.
At the end of the pay period, record what ran out and what remained. Adjust from that evidence instead of replacing your limits with somebody else's percentages.
Written by Larder, makers of an envelope budgeting app for iPhone. Last reviewed .