The envelope budgeting method forces you to accurately budget your expenses each month by only giving you access to a predetermined amount of money, and the goal is to teach you to gain better control of your finances. So how does the envelope system work, and is it the right choice for you?

What Is Envelope Budgeting?

The envelope system is a money management technique that helps track exactly how much money you have in each budget category for the month by keeping your cash tucked away in physical envelopes.

  • Once you’ve decided how much to budget for each category, you are only allowed to spend the amount of cash available in each envelope.

Participate in a Savings Challenge

A no-spend challenge where you stop buying things you don’t absolutely need, or a year-long saving challenge that’ll help stack your savings account quickly, are great ways to keep yourself accountable and motivated to save more money.

Use a Monthly Budget Tracker

Even if you already have a healthy emergency fund, a budget tracker or worksheet will allow you to track how much money you’re earning, investing, and spending each month.

  • Though manually tracking your expenses can take up some time, it’ll also force you to think about potential ways to cut down on your spending and improve your money habits.

How To Start Using the Envelope Budgeting System

One of the best ways to track your spending and control your expenses is to use the envelope system

  • Though sticking to this budgeting method can take quite a bit of self-discipline, it is easy to learn and can have a positive impact on your financial life.

Spend Wisely

When you go grocery shopping or pay your bills, take funds from the appropriate category or simply carry the envelope with you

  • Once you’ve exhausted the funds in an envelope, you cannot spend more without going over budget
  • If you have money leftover, you can either roll it over to the next month or use it to pad your emergency fund

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