Budgeting Made Simple: The Envelope System [with Free Printables] (2024)

FAQs

What is the envelope budget system for beginners? ›

The concept is simple: Take a few envelopes, write a specific expense category on each one — like groceries, rent or student loans — and then put the money you plan to spend on those things into the envelopes. Traditionally, people have used the envelope system on a monthly basis, using actual cash and envelopes.

With this method, you withdraw the total amount of money allocated for essential and non-essential spending in a given timeframe (typically a pay period or an entire month). Then you put the amount of cash allocated to each of your spending categories into an envelope labeled for that purpose.

Cons. It may be time-consuming. If you decide to use cash and envelopes instead of digital tools, you'll need to cash your paychecks and divide up the money every pay period.

Goodbudget and EveryDollar are the only two apps on our list that don't link to bank accounts, though the latter has a premium version that does if you pay for it. The former uses the envelope budgeting method, while the latter employs zero-based budgeting.

Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums.

The digital envelope budgeting system helps users track their finances like never before. If you want to cut down on splurges, identify unnecessary expenses or simply get a better idea of how much you're spending, you can benefit from creating your own system.

The rule is to split your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings. 1. This intuitive and straightforward rule can help you draw up a reasonable budget that you can stick to over time in order to meet your financial goals.

Instead of having money set aside for each category in your head, or even scribbled on a paper somewhere, take one envelope for each expense category and mark it clearly. Now, put the exact amount of cash for this month in the envelope for each category. Do this with every expense category, and voila!

The basic premise of cash stuffing is that you set aside cash for different budgeting categories at the beginning of each month. The goal is to spend no more than that cash you've set aside for each category.

Expenses for housing, utilities, insurance, and debt repayment are typically not included in envelope budgeting because they represent the fixed part of your budget—expenses that are non-negotiable and don't change much from month to month. You probably pay these bills electronically or by check.

Does cash stuffing really work? ›

Benefits of cash stuffing

While other budgeting methods merely track your spending, cash stuffing physically prevents you from going over budget. Once an envelope is empty, you can't spend any further. That makes it useful if you're an impulse shopper or find yourself coming up short every month.

What Is Dave Ramsey's Envelope System? The envelope system is a way to force yourself to accurately budget discretionary expenses every month. It demands honesty, discipline and commitment, but the reward is that you gain control of your finances.

You just take the exact amount of cash you've budgeted for each category and stick it in individual envelopes. Then throughout the month, you check your envelopes to see what's left to spend—because you'll see the literal amount in cash. Right there. How easy is that?

Use Goodbudget.

Goodbudget helps you to stick to your budget limits without the hassle of keeping actual cash in physical envelopes. It's available on the Web, iPhone, and Android. Save for big expenses, share household expenses, and budget on the go.

Envelope budgeting, also known as the envelope system, is a budgeting method that distributes your income among different physical or digital envelopes designated for specific spending categories like groceries, dining out, entertainment, clothing, utilities, and more.

What Is Dave Ramsey's Envelope System? The envelope system is a way to force yourself to accurately budget discretionary expenses every month. It demands honesty, discipline and commitment, but the reward is that you gain control of your finances.

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

The 100-envelope challenge is pretty straightforward: You take 100 envelopes, number each of them and then save the corresponding dollar amount in each envelope. For instance, you put $1 in “Envelope 1,” $2 in “Envelope 2,” and so on. By the end of 100 days, you'll have saved $5,050.