Budgeting 101: Setting Up A Cash System Budget

Budgeting 101: Setting Up A Cash System Budget

Ready to set up a cash system budget to help you save money and pay off debt? It’s time to start now, and it’s really easy to do.

Budgeting 101: Setting Up A Cash System Budget

Budgeting is hard, and everyone has their own way of doing it. Well, what way is best? How many categories should I have? What if I forget something? These are questions I think most people think about. The first thing that you need to remember is that every bodies budgets will be different, and that’s the way it should be. What works for me, may not work for you. However, today I just want to give you practical tools that you can use in order to come up with the best budget for you.

So lets dive in and get your budgets figured out…

Having Both Parties On Board

Before we can even begin to start budgeting, you are your spouse need to be on the same page. If you have one person in charge of making the money and one person in charge of the bills, it won’t work! You both need to be on the same page with your budget, and bills so that you can both achieve your goals together.

My husband and I struggled with this for years. He was in school full-time, and working full-time. He claimed he didn’t have the time to work on the budget and bills with me. But I kept reminding him… If something happens to me, you will have no idea what to do with the bills… AND we are not on the same page. We worked this out, as you will see in the video below. My husband and I now schedule monthly budget meetings, or budget dates, and we discuss our finances. It does a world of difference when we are on the same page. We both know not to use our debt cards without talking to each other first. We also know the bills that need to get paid, and if we need to side hustle even more, then we can do so. I have a whole video about this below, go ahead and watch:

At the top of a piece of paper I want you to write all the sources of income that you have:

Husband’s Income:______________

Wife’s Income: _________________

Side Hustle: ___________________

Side Hustle: ___________________

Total: ________________________

I understand if you are not able to write all of these in yet, but do an estimate, and always estimate low. Give yourself a base income that you can be sure of each month. FYI: side hustle means anything you can do to make extra money, like selling items you no longer need or use in your home, working part-time for somebody, babysitting, anything extra.

Now, write out all your bills. My husband and I use a spreadsheet on the computer for our bills, and we have a spreadsheet for our sinking funds too (we’ll get there, but not yet). We have it set-up so that they are all in order from when they are due:


Due the 10th: Mortgage

Due the 15th: Cell Phone Bill

Due the 20th: Water Bill


WAIT! Before you conclude how much you owe in bills, I want you to make GROCERIES, GAS, and CLOTHING categories for BILLS! Food, gas in your car, and clothing are not an option, they are necessities. You need it to survive on this budgeting journey. So consider those 3 things, and anything else that is a necessity to you, a BILL. (I do pull cash for these categories, but they are consider BILLS because I need them.) We will also discuss how much you need in your grocery budget.

Total Amount Due Each Month For Bills: _______________

This way we have them in a specific order, and I can be sure that each bill is getting paid on time. Now, I want you to estimate on the high side what each bill will cost you each month.

Get a total of billing expenses. Subtract the total income you are bringing in, from the total expenses you have in bills. This now is the total we have to work with! This is the amount you have for CASH.

Before Cash, Lets Talk Debt

First, lets stop! I don’t want you to think you can spend it all! Are you in debt? Do you have student loans or credit card debt? Do you owe on your cars or house? The whole goal of managing your money wisely is to also get out of debt.

Before we can even discuss cash, first lets address debt. How much are you able to put towards debt? Only you can answer this one. Debt is a burden. It hangs over your head and can destroy your mental state, and can easily destroy a marriage. Confrontation happens when there is worry and stress in a marriage, which debt directly does to both parties. It is the one thing that lingers in the back of your minds, because it’s unsettling and nagging. You must get out of debt! When my husband and I paid off our credit cards, it was FREEDOM!!!!! We rejoiced, and even celebrated because we got rid of a huge lingering burden. We are in the process of paying off our cars right now, and it will happen because we are focused and determined to do it!

So, if you have $1000 left over after bills are paid, a good rule of thumb is to put half of it towards debt. Now, I know there are SO MANY WAYS to address this, but that’s what works for us. It all depends of where you place your value. Are you gazelle intense on paying off debt, or are you taking the relaxed approach. If putting $500 extra towards debt is too much for you, then adjust it as you may. This is your budgeting journey, not mine, but I do encourage you to put as much as you possibly can towards debt. Once we get the debt factor taken care of, then we can move onto your cash budget.

My oldest helping me organize our cash into our envelopes and wallet.

How To Formulate A CASH Budget

These are the cash envelopes I use for storing cash in our safe.

I want you to write out a list of categories you want for CASH, and your SINKING FUNDS.

Sinking Funds Meaning: setting money aside for a specific reason, so when the time comes, you have the money needed for this specific purpose, like Christmas. Having Christmas money ready to go in an envelope that you’ve been saving each month all year, instead of waiting until December and not sure where the money will come from to pay for gifts.

Here are some examples for CASH BUDGETING:

Personal Money: $50

Medical Co-Pays: $60

Date Night Money: $100

Household Money: $40

Eating Out Money: $60

Entertainment Money: $40

For The Kids Money: $40

These categories are not all necessities, but they are useful to have to keep life from being totally mundane and boring. I suggest that you do have some personal money each month… it will keep you focused and it will help keep the drive to pursue financial freedom.

Here are some examples for SINKING FUNDS:

Christmas: $100

Birthdays: $40

Vacations: $50

Medical Expenses: $125

Pet Expenses: $30

Car Maintenance: $50

House Maintenance: $50

These examples give you an idea of sinking funds, but they are not always necessary if you consider these emergencies to use your emergency fund on. We have an emergency fund, for emergencies only! We are not even tempted to use it for pleasure. We NEVER want to use our credit cards ever again, so if an emergency arises and we need funds to pay for something, then we will rely on our emergency fund, not credit cards.

For our family of 6, we feel comfortable with a $5000 emergency fund. We are not talking about sinking funds, or anything else. We are strictly talking about emergency money. Once all debt is paid off, our cars, then we will up our emergency fund to a much higher amount. For now, we are focused on paying off our final debt.

Cash Is King

If you want to succeed in your budgeting journey, you CANNOT discredit the importance of using cash. Debit cards are definitely convenient, but they don’t help you at all. When you swipe the debit card, does the purchase pain you? Like seriously, do you feel emotional pain? The simple answer is NO! No you don’t… but I promise you, if you pay in cash, it will physically burden you to let go of that money. That is why it is crucial to use cash when paying for GROCERIES, GAS, CLOTHES, COFFEE, TARGET TRIPS, etc.


My Favorite Cash System Wallet

I have a cash system wallet. I LOVE LOVE LOVE my wallet. It has slots in the back that hold all my money in one place. I do not need to use envelopes anymore for holding cash in my purse. Having that visual reminder that this is the cash I have for the month. If I spend it all, it is gone! I cannot run to the bank to grab more. I can tell you, it emotionally pains me to let that money go. At the end of the month I normally don’t have any money left in my wallet, and it pains me! I start playing the “what if” game and it pains me.

This is good! This keeps my husband and I both accountable for our expenses, it keeps us on track, and we are still accomplishing our financial goals. Life works so much better with restrictions. This is not a free-for-all. We work HARD for our money. We deserve to treat it wisely. We do not deserve to blow it and forget it. It’s time to be responsible, get our lives in order financially, and start living purposefully.

Now What?

You have a budget. You know what bills need to be paid. You know what categories and amounts you need/want for your cash system to work. Now it’s time to figure out how much cash you need from the bank, and what bills you need.

Next to each category I write out how many $5s, $10s, $20s, $50, $100s I need from the bank. I make sure my totals are perfect, no errors. Then I go to the bank with a little piece of paper and I show them.

_____ $5s, _____ $10s, _____ $20s, _____ $50s, _____$100s

Total: ________________

When I get home, then I portion it all out into my envelopes and I’m done. This allows helps me know that each week we have grocery money, and we won’t go without food.

This way of budgeting is easy, convenient, and keeps me accountable for my purchases. If there is an unexpected expense that month, that is what my emergency fund is for, or I can adjust my debt payment for emergencies. You will succeed with this process. It works!!!! We have been following this process for 3 years now and it works great. The lingering nag of financial burdens will be gone. You will have your game face on, and life will run more smoothly.

Get Your FREE Cash Envelope Category Labels HERE!

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4 thoughts on “Budgeting 101: Setting Up A Cash System Budget

    • Girl, you must have blown up Amazon. It says currently unavailable. =(
      on the budgeting wallet.

    • This is so helpful Aimee! I am going to do my best to follow this once I start getting income after just winning my disability case. There are 2 other members that I live with, but they would never do this! So I’m assuming it’s possible to do myself & just figure out my 3rd of the rent & utilities then go forward with the other topics? It would be incredible if this works for me to be able to live on a budget!

      • You can totally do it! Budgets are not just meant for people with a lot of money, they are meant for all people who make any amount of money. Budget is just a great tool to use to make sure you know exactly where all of the money is going. You control the money. Don’t let it control you. 🙂

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