Money management has always been a dilemma for us Pinoys. With lots of articles in the web, how do know you are following the right approach in saving money?  Read on and I’ll share with you my very own CASH ENVELOPE SYSTEM that I have been using way back before until now that I am married.

We’ve heard about the 50-20-30 rule of other Cash envelope systems which is a great way to start budgeting, but what’s great about this Cash Envelope System I will be showing you is that I get to save money and budget for the DIFFERENT and more SPECIFIC aspects of my life instead of putting it all in just 1 fund or 3 funds.

This system has helped me tremendously! For instance, I created my PLAY FUND and EMERGENCY FUND.  I get to enjoy and relax using my PLAY FUND without sacrificing the money I allocated to my Emergency fund since that will certainly be used whenever an unexpected expense arises. I’ve created also my GIVE FUND AND MY FINANCIAL FREEDOM FUND, all of which will be discussed later on.

 How to Budget using the Cash Envelope System?

The most important part of budgeting is SEPARATING your income into different funds for SPECIFIC purposes. In this way, when a NEED arises, you get money from one specific fund without affecting the purposes of your other funds.

Your income should be divided into 7 funds  different categories with the corresponding % of the allocation. Personally speaking, these 7 funds are the most important ones we should have. But of course, since we are all wired differently – we have different goals, principles, beliefs, upbringings- you may add more funds to your list. It’s just that the 7 funds below are a must to always allot your money for:

  • Financial Freedom Fund
  • Long Term Savings for Spending Fund
  • Emergency Fund
  • Education Fund
  • Necessities Fund
  • Play Fund
  • Give Fund

*This is just a guide. Depending on your preferences, you may add more funds and change the % allotted per Fund.

I also have a list of my own Sinking Funds.

A Sinking Fund is a strategic way to save money for a short-term goal, by setting aside a little bit of money each month.

Using the sinking fund strategy is one of the most effective ways to save for short-term goals. So instead of pulling out a huge amount in just one blow, you can cut them down to bite-sized goals by saving a small amount from your paycheck every month. Here’s some of what I’ve managed to get separate envelopes for my SINKING FUNDS:

  • Travel Fund
  • Birthday Fund
  • Baby Fund
  • SSS/Philhealth/Pagibig Fund
  • St. Peter’s Fund
  • Retirement Fund


Here are some of the TOP SINKING FUND categories you can choose from:

  1. Dental Checkup
  2. Medical
  3. Vehicles
  4. Gifts/Birthdays/Mother’s day/Father’s day
  5. Life Insurance
  6. Pets
  7. Clothes
  8. Car Maintenance/repairs
  9. Home Maintenance/ Repairs
  10. Child’s tuition fee
  11. Child’s expenses
  12. Vacation

Have you thought of other categories? Share them in the comments section below!

*Later on, we will learn how this Cash envelope system can be used for COUPLES.

You can place these funds in ENVELOPES, whatever size works for you. Use 1 fund per envelope.

I personally use small brown envelopes because they are less bulky when I place them in my bag. Whenever I leave home, I just grab the envelope I need. It’s more convenient for me since I already have the instant cash with me with the allocated budget in it.

UPDATE: I’ve switched from brown envelopes to these sealed-plastic cash envelopes which are more durable, sturdy, stylish, and can hold loads of coins, cards, pens, and receipts. Compare that to brown envelopes that are more prone to wear and tear. Plus, it’ll save me more in the long run since I can avoid frequent buying of replacements of brown envelopes.

Once you receive your income, make a BREAKDOWN of your money and simply allocate it to each fund according to the percentages you desire, just like the one in the example above. Practically, necessities such as food, water and electricity take up a huge portion in your budget. Hence, 45% is allocated to your NECESSITIES FUND. But then again it’s up to you how big or small your percentage of allocation is per fund.

Notice that for each envelope, I left a big chunk of space after the heading. Whenever I add or deduct money from my envelopes, I write down the date, amount added or deducted,  and the remaining balance left in the envelope, just like the transactions we see in our Bank passbooks. (sorry, I didn’t show it in the pic for privacy reasons )

For deductions,I usually write a small note at the corner just to remind me where I used that certain amount deducted. This helps me keep track of where my money goes.

Now if you run out of money in 1 envelope but need more, then you only have 2 choices:

  1. When an envelope is empty, you cannot spend anymore money in that fund. This becomes a concrete reminder that spending is enough and that you are only limited to that budget.
  2. Pull money from another envelope, but of course that leaves you with less money for that fund


Just to remind everyone, Wealth Rule no.1.  ALWAYS PAY YOURSELF FIRST.


Personally, I recommend prioritizing your funds for church offerings as soon as you receive your payslip. All the blessings we have come from HIM-your job, your wealth, your LIFE, EVERYTHING – hence it is truly righteous to give it back and pay it forward.

So here’s a little tweak to that equation:


Broke people use the LEFTOVER STRATEGY. They pay everyone else first, then invest or save what’s left.

The Universal Principle of Management: Until you SHOW you can handle what you’ve got, you won’t get any more.

We’ve heard rags to riches stories of how people have won the lottery and instantly became a millionaire. But because of lack of financial knowledge and improper handling of money, it did not take long before their riches vanished and they were back to where they started. One thing that virtually all millionaires have in common is that they are good at MANAGING their own money.

Wealthy People are not any SMARTER, they just have a better MONEY MANAGEMENT HABIT.

Let’s practice that Money management habit of yours!

Be thrifty for a period of one payday. I personally recommend allocating your money on your funds, and like I mentioned, you can add more categories to your fund if you deem it necessary.Do this for a few months and I guarantee that you’ll see your money grow. After several months, you will feel a sense of accomplishment and satisfaction. This will surely motivate you to continue the habit.

All Pages

Now let’s get into details with every fund:

1. Financial Freedom Fund

Financial Freedom is the ability to live the lifestyle you desire without the need to work, OR rely on anyone else for money. This can be achieved by earning PASSIVE INCOME which actually is the secret of millionaires.

There are two primary sources of Passive income namely:

  1. Investment income-where your investments work for you
  2. Ongoing Passive Business Income-where your business works for you

To have enough to pay for your desired lifestyle, your best bet is to have BOTH Investment income and Business income working for you.

Have you heard of the story of the Golden Goose that laid Golden Eggs? The summary goes something like this:

A man has a Golden goose. He takes care of it and to his surprise, she lays golden eggs. He and his family are now rich because she lays a golden egg every day. After sometime, the man and his wife get greedy and want more. So thinking that the goose has a lot more golden eggs inside her, they kill it only to find out that she was just like any other normal goose. Then they became poor.

The idea is to create a GOLDEN GOOSE so that when you stop working, you get to spend the EGGS.

Your Financial Freedom Fund  (FFF) serves as your golden goose. Use this as your INVESTMENT CAPITAL OR BUSINESS CAPITAL. Let’s say you put up a business using P100K from your FFF. As soon as you earn back the P100K, put it back in your FFF PLUS a portion of your profit from the business. Do this continuously and watch how your FFF grows as the years pass by.

Rule:  Never kill your FFF. The time to spend your FFF is NEVER.

When you stop working, that’s when you get to spend the eggs. And with that, financial freedom can be achieved.

2. Long Term Savings for Spending Fund

Wanna buy your dream? Or in 5years, would you like that beautiful house and lot near the countryside for your growing family?

If you find yourself yearning for something in the future, allocate money for your LTSS fund. Other uses of the LTSS fund are for your child’s tuition fee, a family vacation or something you foresee yourself purchasing in the next few months or years. Watch your fund grow and reap the benefits when the right time comes.

3. Emergency Fund

From the word itself, this fund is to be used whenever an emergency arises such as accidents, unexpected hospital expenses, costs to cover your expenses when you resign from work and are still job hunting.

Before investing your money, it is recommended to build an emergency fund equivalent to SIX TIMES the amount of your MONTHLY EXPENSES.

4. Education Fund

“If you think Education is expensive, try ignorance”- Ben Franklin

No matter how many years has passed that you haven’t stepped in school, learning is still a continuous process. If you are not growing, you are dying. This fund will help you cover expenses for attending seminars, buying financial books of your favourite authors, your enrollment for another course or probably anything that will broaden your knowledge and skills.

“If you are not growing, you are DYING.”

5. Necessities Fund

This takes up the largest portion of your budget since these are necessities we need to lead a comfortable life. These include Necessary expenses that are essential costs of living such as bills, food, transportation and gas. Meanwhile, you may also include other expenses such as payments for your insurance.

6. Play Fund

The most enticing, if not, the favourite fund among all the funds : The Play Fund. Saving requires discipline and perseverance, but you shouldn’t be deprived from spending on things you love right? You should reward your motivation too!

Go ahead and treat yourself out with your family and friends. Just don’t go overboard in spending as you still have a budget to stick with.

7. Give Fund

This is helpful for religiously inclined people. Setting a certain amount for God as soon as you receive your income is something that should be prioritized. All the blessings we have come from HIM-your job,your wealth, your LIFE, EVERYTHING- hence it is truly righteous to give it back and pay it forward.

Moreover, when you’re feeling extra charitable or when a friend needs financial help, this is your go-to fund.

It’s not “ When I Have plenty of money, I’ll begin to manage it.” Rather, it’s when I begin to MANAGE it, I’ll have PLENTY OF MONEY.

 Cash Envelope System for COUPLES

Below is a guide on how couples can use this system. Note that each partner has his own personal cash envelopes aside from the joint cash envelopes. This is related to the “mine, yours and ours” approach.


Have your own set of envelopes for your personal funds and for your joint funds as well. I hope this guide helps. If you have questions or any suggestions, leave a comment down below. I would love to know your ideas!

How to make sure you succeed

There is no one in this world who can make you stick to a budget other than yourself. Now, you may be knowledgeable about the funds of the Cash Envelope System as your budget strategy but sticking to it is the tough part.

I can give you all the advice in the world on how to start budgeting, but ultimately it comes down to you and how disciplined you are. So before you start this journey, you’re really gonna have to want it, almost like you have to hit a point in your life where you’re totally fed up of your financial situation and you need a change.

Let me know if you want or have tried this system and if it has worked for you!

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.