The Envelope Budgeting System

The Envelope Budgeting System: Cash Method, Apps, & Banks 2022

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The Envelope Budgeting System

One of the most popular methods of budgeting is envelope budgeting. The system is incredibly easy and uncomplicated which is why so many people like it. Essentially, you create a list of categories like car, house, food, clothes, etc and you place the money you can spend in that category in an envelope. 

Keeping up with the amount of cash you have left in that envelope keeps you on a budget in your different spending categories and could give you ideas of areas you can cut back in.

There are lots of different systems for using this method such as paper envelopes full of cash, an envelope planner wallet, envelope budgeting software and applications, and using prepaid debit cards. 

One expert who endorses the envelope budget: Dave Ramsey. He is one of the most respected financial advisors and authors today. He sells a Dave Ramsey brand envelope budgeting wallet that includes an envelope budgeting template to make it easy for you to get started with this method. 

Dave Ramsey says that for a lot of people envelope budgeting has been the key to controlling their spending when other methods have failed. It has been a popular budgeting trick since before Dave Ramsey made it popular; it has been around for decades. 

What is the envelope budgeting method?

What Is Envelope Budgeting?

Envelope Budgeting Categories

The first step to using the envelope system for budgeting is to pick which categories you need to budget. You can use this method for your entire budget or use it to cut back in areas where you are spending too much.

Here are a few ideas for the spending categories that most people use with the envelope method for budgeting:

  • Food: grocery shopping and eating out 
  • Car: gas, upkeep 
  • Healthcare: insurance, prescriptions, appointment fees 
  • Personal: movies, clothes, streaming, activities 
  • Home: rent, supplies, cleaning 

Once you have decided which categories you spend money in, you can figure out how much money you need to maintain all of these things while also having some money left over to go towards savings and debt reduction.

If you have a lot of debt you need to take care of or you are saving up for a big purchase like a vacation, then you can tailor the spending budget of the categories to reflect your financial goals. 

The goal is not to just not spend more than is in the budget, but it is to have some money left over in the envelope at the end of the month.

If you have extra money leftover in your spending category, you can either direct it towards your savings and investments or let it roll over into the next month to give you extra spending room for the future in that category like extra nights out. 

Envelope Budgeting Methods 

There are a lot of different ways to use the envelope budgeting strategy. The most common is to use paper envelopes filled with cash, but some people do not like to carry cash with them. For this reason, they have developed envelope budgeting software that allows you to use the method digitally. 

Envelope Budgeting App

Envelope Budgeting App

Using a digital rather than a physical system to the budget can make your envelope budgeting system a lot more secure. Some of the best envelope budgeting apps currently on the market are Goodbudget, Mvelopes, and SimpleBudget. The app for envelope budgeting that has the highest ratings is Goodbudget. The Goodbudget app for envelope budgeting is available for desktop, PC, MAC, Android, and iPhones. 

Envelope Budgeting with Quicken

Quicken is popular financial software. It has budgeting options but is not made for envelope budgeting. However, there is a way to create a system within Quicken that mimics the envelope method even without the software being built specifically for that. Using the reminder feature is one way to stay on top of your bills and spending with Quicken. 

Reminders do not create actions but send you a notification that it is time to do that action, whether it is paying a bill, receiving a paycheck, or transferring funds.

The “projected balances” feature of Quicken effectively shows you what your accounts will reflect when the reminder takes place, which allows you to adjust your budget for the best-projected balance in the future.

It is not the same as dividing the funds into categories, but it does replicate the results. 

Related content: The debt snowball method with free printable

Banks With Envelope Budgeting

Banks with Envelope Budgeting

A lot of banking has been moved completely online and technology has advanced a lot. Because envelope budgeting is such a popular and effective budgeting method, some banks have updated their software to reflect a cash envelope budgeting system and are offering envelope budgeting online.

One online bank that offers an envelope budgeting account is Qube Money which offers one of the best envelope budgeting software around. They even have a joint account for couples that uses digital cash envelopes to help them meet their goals as a family. 

The Qube Money envelope budgeting app is Android and Apple compatible.

Related content: Budgeting for single moms

Envelope Budgeting with Prepaid Cards

If you want to use the envelope budgeting system, but you do not like carrying cash, then using prepaid cards may be the right option for you. You can divide your budget into the spending categories that you want, and then purchase prepaid debit cards for the amount of each category. 

You will need to label the cards so that you do not get them mixed up. Using stickers or simply writing on them with a permanent marker will work for labeling the prepaid cards.

You use the prepaid cards just as you would with physical cash by pulling them out whenever you need to purchase in the spending category. 

Printable Cash EnvelopesPrintable Cash Envelopes

Get our free printable cash envelopes here


Whether you are using cash envelope budgeting or digital envelope budgeting methods, there are a lot of benefits to using this kind of budget system. The simplicity is what a lot of people like.

You can use budgeting with envelope system software to manage your budget anytime, anyplace.

Reducing debts and saving for vacations and other big purchases all become more tangible goals when you have your finances divided into spending categories. 

Dave Ramsey is just one expert who promotes the use of the envelope system, there are many more people who can attest to the effectiveness of this technique.

Whether you prefer cash or digital money, you can still use the envelope system of budgeting to keep your spending in check and plan for the future. 

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