Which Categories Belong in Cash? A Selection Rule for Envelope Categories Based on Overspend and Transaction Counts

Paying in cash restrains spending in some categories and merely inconveniences it in others. This paper prices the choice category by category, using stated monthly spending and stated card-overspend factors (spending on card relative to the household's own intended level) across six discretionary categories, against the costs of cash: hassle valued at USD 64.80 a year per category and forgone cashback of 1%. Cash wins clearly for online impulse purchases (net USD 563.33 a year), dining (USD 711.75) and entertainment (USD 277.20); it loses for transport extras (USD -32.67) where the overspend factor is small. The selected set — dining, grocery_extras, clothing, entertainment, online_impulse — is worth USD 2093.68 a year against USD 2061.01 for cashing everything indiscriminately. The rule that emerges: cash belongs where the payment mechanism itself loosens spending, not where spending merely passes through a card. The study is computed from stated parameters, with a Monte Carlo check, and is not measured. SIMULATED, NOT MEASURED.