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[How To] Envelope Budget System

Updated on January 22, 2012

I'm a mess when it comes to tracking and handling my personal finances which is why I've been through dozens of different software programs and methods to avoid the dreaded grip of debt.

Despite the fact that I'm a very technical person - I still found it easiest to track my finances using an age old method of envelope budgeting.

It's one thing to track your money using online systems such as your bank statements and saving receipts but the simple act of breaking down your week through envelopes has a profound effect on making sure you stay on target with your financial goals.

The following is a list of steps to get started with an envelope budgeting system:

Step 1: Get the Supplies

As you can imagine, you'll need at least seven envelopes for our simple system.

You'll probably have these sitting around your house but, if not, you can always pick up a small pack for about $2 - $5 at a local store. Yes, you're already spending money but this is for the greater good and the long-run.

Organize your envelopes into a pile and rummage for a pen or marker which you'll be adding the days of the week to each of the envelopes (shown in the next step).

Step 2: Organize your System

Following up after you've dug out your supplies, you'll be placing the days of the week onto each of the envelopes (which will be explained in further detail in the next section).

I use a simple system with mine:

  • Mon
  • Tue
  • Wed
  • Thu
  • Fri
  • Sat
  • Sun

I use a different color for Tuesdays and Thursdays because those are the two days I go to school which means I'm spending additional money on gas, road tolls and extras while I'm at the campus all day.

Your system might reflect something like mine in terms of when you need to gas up for the week or have a recurring, weekly payment.

For now, though, write down the days of the week onto your envelops and then let's move on to the next section ...

Step 3: Implementation

As I've mentioned, this whole envelope budgeting system is actually really simple but there are little things to consider when using it:

  • Have a weekly (and monthly) budget in mind before you fill each of the envelopes with your daily budget.

For example: I set aside $10 for each of my days with the exception of Tuesdays and Thursdays which I will set $30 for the gas and school expenses I will be spending. You should have an overall budget which incorporates your groceries, bills and normal expenses.

  • Any money left over after the day should go straight into savings.

This one is a BIGGIE because you don't want to tell yourself that the money you've saved that day can now be spent on anything you want just because you reached your goal. Put it in the bank, seriously.

  • Have some "fun" money set aside

You will be spending money on things you want throughout the week otherwise you're going to have trouble trying to save because it will feel like "work". Set aside a small amount of money, each week, that is completely guilt free spending money but don't dip into your other envelopes if it's out of your budget.

  • Play with it

Although the envelope system is simple, you'll still want to play with it until it fits your income and expenses. If you're barely scraping by working through your budget than adjust it - if you've got too much left over than try to reduce it even more for additional savings!

That's really all there's to it for this kind of system. It's very low-tech but highly effective at helping you stay on track with your money.

I hope you found this helpful - check out the additional personal finance resources below to get a true understanding of how budgeting works.


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    • Oddity profile image

      Oddity 6 years ago

      Indeed Baby,

      That's one thing my stepdad has always tried to distill on me - ONLY CARRY CASH! - he'd say.

      I find myself far less likely to throw down a few extra bucks when I'm filling up my car because of the ease of my debit card - I go, spend what I have on gas and be on my way.

    • BabyGearGalore profile image

      BabyGearGalore 6 years ago from Phoenix, AZ

      If you only carry cash, you can't overspend because when it's gone, it's gone!

    • Arioch profile image

      Gordon D Easingwood 6 years ago from Wakefield, United Kingdom

      Interesting budget technique makes an interesting hub

    • profile image

      mackyi 6 years ago

      very simple,and unique method of budgeting.This is something that anyone can do. Interesting!