Envelope Budgeting . . . A Simple Way To Gain Control of Your Money

envelope budgeting

In today’s card-swiping culture it’s easy to lose track of where your hard-earned money is going! Believe me, I know! Budgeting and keeping track of money are NOT my strong suits! (I did recently start a deals page to help!)

You have probably heard of the envelope budgeting system. It was made famous most recently by money guru Dave Ramsey as part of his Total Money Makeover plan. But the concept has been around a long time! During the Great Depression, when people didn’t have much trust in banks, people would set aside money for specific purposes in envelopes as a way to keep track of what little money they had. With this simple budgeting system, people always knew exactly how much money they had spent and how much money they had left.

What a concept!! And guess what? It works just as well today! If you would like to take control of our money, instead of the other way around, you might want to give this a try.

Since Christmas is coming up (way too fast!) I thought I might try and do a version of this envelope budgeting to keep me on track with my Christmas spending. Hopefully from there I will move on to more envelopes and more control. But for now I figure it’s at least a start!

I started with the most IMPORTANT part…a cute envelope to put my money in! lol.  I’m kidding. It’s not THE most important part…but it’s always nice to have something aesthetically pleasing to look at when implementing an odious task. ;-)

I decided to draw up a simple cash envelope template based on those cool cash envelopes you get from the bank. Then I added some lines to record expenditures on. All you have to do to make your own envelopes is:

  • download the template here
  • print out on whatever kind of paper you like
  • cut out envelope along solid lines
  • fold on the dotted lines
  • add a couple of pieces of tape to secure

envelope budgeting

envelope budgeting

Of course you could just use some regular envelopes you already have lying around the house, but what I like most about these is they fit nicely inside your standard wallet.

envelope budgeting

 

Now you are ready to set up your own cash envelope system! Here are a few simple basics for starting (adapted from Dave Ramsey):

  • Set up a BUDGET

I know…it’s a “dirty word” to me too! ugh. I really despise that word. BUT, I know from experience, life is MUCH easier when you have one and it’s essential if you’re going to successfully implement the envelope system. I found a VERY SIMPLE method for determining your Income and Expenses at Budget101.com.

  • Create Your Categories/Envelopes

Start with the basics like food, gas, clothing and entertainment.

  • Fund Your Envelopes

After you’ve categorized your cash expenses, fill each envelope with the money allotted for it in your budget. For example, if you allow $100 for clothing, put $100 in cash in your clothing envelope for the month.

  • Go Forth And Spend (Within Your Budget)

Once you’ve spent all the money in a given envelope, you’re done spending for that category. No visits to the ATM to withdraw more money!

  • Cash Is King

For some reason spending CASH is more “painful” than swiping your debit or credit card. Using cash whenever possible is a good habit to get into to help avoid over-spending and impulse spending.

  • Don’t Expect Perfection Overnight

It will take a few months to perfect your system. Don’t give up! You’ll eventually get the hang of it and it will be SO worth it!

envelope budgeting

 

A few extra tips:

  • Plan your budget and fund your envelopes based on your pay periods.
  • Spend each month’s income and each individual paycheck on paper before it comes in.
  • Have some fun! All budgeting and no “fun money” makes Jillee a dull girl!  :-)
  • Start now!

 

Do you have a budgeting system set up in your household?

 


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Comments

  1. Sue Coates says

    I used to “forum” button on top of this page and that one worked……earlier I was talking about the link on the bottom of this page – where it says “one good thing by jillee forum” …..

  2. Iryna Miller says

    I had this system for several years ago. And it was really working! Now I am using paper strips to divide my money in the home-budget purse:) And every strip has it’s aim name :) That’s simple and working for me too!:)

  3. says

    I’ve been using a system simular to this….I set up FREE checking accounts at my bank for things like property taxes, insurance, Christmas, etc., each month I transfer a set amount to each of the accounts. When I need the money again I transfer the amount needed to my checking account and write a check. I like this system because I don’t have cash sitting in the house.

  4. says

    I saw a link on pinterest to a smart phone app which utilizes this method, but can be shared with your spouse. That way when both of you are trying to stick to the allotted budget and you’re not together there won’t be overspending.

    https://www.eebacanhelp.com/features.php

    I’ve been meaning to try this method myself. Cash works for me, but I’m definitely guilty of hitting up the ATM when I run out.

  5. Aimee says

    Hi! Love your site! I personally don’t believe budgeting is very helpful in saving money and curbing spending. I think what works best for us is actually tracking expenses by category so that over the course of, say, a month, you can see your spending habits and just HOW MUCH you do spend on eating out vs. groceries, shopping, entertainment, etc. Then that can help you, if you do want to save “X amount” or percent on your monthly income, you know what categories to tackle and to try to spend less on (like, making notes to eat out only once a weekend, choosing to watch one movie theatre movie a month, etc.). I feel the same about budgets of companies and governments… so much money goes to waste when people are allowed to “spend all of an X amount of money” on something and people are likely to waste money in order to use it all up so that their budgets are not cut back for the following year. For the personal expense tracking, I’ve been using The Birdy [https://thebirdy.com/] for the past almost year and LOVE it (and the fact that it’s free)! It’s so helpful that you can create and organize your own categories, see your spending in easy graphs, and daily just email your expenses to a certain email address and they are inputted directly into your account for that day.

    • Stephanie says

      That’s how we budget. You constantly have to have a plan for your money. I think of a budget as a guideline so we spend our money with a purpose rather than just because we have it. But you have to constantly be analyzing your budget and spending so that you can see where to make improvements. Cash is helpful if you tend to over spend easily. For example going $5 over at 2-3 different grocery stores can have you spending $10-15 extra every time you shop. If that is every week you spent an additional $40-60 that month. Having cash can limit that extra spending.

  6. Karen says

    Jillee, thank you so much for posting this! Budgeting is not rocket science! As Dave Ramsey says, the hardest part is learning to control the person in the mirror. :) And it’s true, for me anyway! Cash is the way to go, you feel the pain as you hand over the $$. Thank you for the template, I’m off to find my scrapbook paper to print these!
    Karen

  7. Leslie says

    Many years ago I found a template for a debit card envelope at Motley Fool. They don’t have it anymore that I can find but anybody can make a paper sleeve. It just had lines for date, who, $. I sheathed my debit card and all my credit cards in one and wrote down everything I spent using it – debit or credit. Having to write it down made me think; I always saw how much I had spent on it lately and sometimes I would write my current cc balance or bank balance on the top. Every week I would record each amount into my (quicken) check register — sometimes even more than once a week.
    These days I keep one cc in my wallet for emergencies only and my debit card. (I also am now pretty much out of debt.) I still write down everything I spend using my debit card. Writing it down helps me keep control over my impulses. If I were to adopt this system, I’d still write down on the appropriate envelope how much I was taking out, when, where and since there’s room — for what. Once you see some of the frivolous things you do, you automatically (shame reflex??) change your habits.

  8. MaryB says

    I started using this method about 6 year ago. We were on a very restrictive income, having recently come to this country. I took the monthly utility bills/insurance and food and averaged the Largest of each of these out. We don’t have a mortage so that wasn’t a worry. Every week I ‘deposit’ the specified amounts into the envelopes for the bills. Hubs budgetted for his necessities like gas. When I paid a bill I transferred any extra into ‘bank’ envelope. It took only a short while to see that latter envelope growing fatter. My bills were always paid on time, my groceries were paid for in cash from my weekly food allowance and I transferred any remaining into the ‘bank’ one from my purse. I never go to an atm. Our circumstances are considerably better and have been now for over 4 years but I still stick to this system. I don’t have an envelope for eating out or for entertainment. (these are something we do rarely so they can come out of the ‘mad money in the bank envelope) I do have one for Christmas and for going on vacation. Popping cash into these makes it all much easier to cope with the holidays etc.

    I do recommend one thing. When you are shopping use a calculator. Seeing the numbers adding up helps focus on what you need rather than just want. Then paying over that cash really makes you realise what you spend.
    Love your envelopes… I just use plain old ones!

    • Lynda says

      Oh I agree about the calculator, I keep a credit card sized one in my wallet just for adding up my purchase. Even though I try to stick to my list- there is always something being added to the cart. It gives me the visual I need to see whether I really “need” or just “want”.

  9. Ruth Chidley says

    Hi Jillie…thank you for the encouragement to budget. My husband and I actually took the Dave Ramsey course about 6 years ago which is WELL WORTH the small amount of money that is charged. Once you have taken his course, you can retake it over and over at no additional charge. My husband even went back and helped teach a few of the classes…saying all that…I have to be honest and say, we got off track because of many factors I don’t need to bore you with…lol! What is important we have been working at getting ourselves back on track and your cute envelopes will be helpful. I use an iPad and for me to download an item easily. I need it in a PDF format. Would you do that for me and others that may be in the same situation? Thank you again, Jillie, for all the work you do for us to make our lives easier!

  10. Florence says

    This is the systems my mother used back in the 40′s-80′s. This was a time before many folks used checking accounts. Many a time I would go to the back to get a money order to pay a bill. The money was always accounted for and bills were paid on time every month. My Mother was a great manager of the money that my
    Father worked so hard for and we always had enough and sometimes extra for a special treat or occasion.

  11. Sarah says

    This sounds like a really great plan. My only problem is I love collecting my points from my credit card because they fund my household projects and redecorating! I wonder if there is an app where I could do something like this virtually!

  12. says

    LOVE the adorable envelopes and the template! I have been using an electronic budgeting and envelope system called YNAB (you need a budget) that allows for envelopes (shared between DH and I) and future planning and spending reporting and we’ve really loved it. The envelope system — in whichever format works best for your family — is definitely the way to improve conscious spending! I’ll use these envelopes for my teenage daughters and start giving them their own monthly money to budget as they wish!

  13. KimH says

    Love your envelopes & template.. While Im a fan of Dave Ramsey, I have checking accounts & saving accounts that control my budget instead of having cash on hand. Its painful either way you spend it to me.
    I have 4 accounts my paycheck goes into.. 1. a bill pay (monthly bills, gas, clothing, & extras), 2. a credit union acct that I put $50 in every other week to eat lunch out on Fridays,, 3. saving acct for taxes, insurance & savings, and then everything else goes into my “home” account. From this account, I buy groceries, any any household goods I need and anything extra not covered above. I’ll often use it to buy clothing or presents, or to eat out if I eat out on my own, but for the most part its a grocery/blow account.
    I’ve been using this system for about 10 years and it works beautifully for me.

  14. Mary K W says

    Oh, I’ve used this method for saving for expenses that come around very year at the same time, like personal property taxes, Christmas, life insurance, car insurance, etc. I divide the amount that will be needed at the specific times by 12, coming up with needs to be set aside each month. It is so much easier to do it like this and not panic when you need to pay $800.00 within a months time! I’ve been doing this for a good 20 years at least, it works!

  15. Lize says

    I don’t like to carry around cash, and I like to use my credit card because it leads to free things at Shoppers Drug Mart (I’ll be getting about $700 worth of free stuff this December because I use that card all the time)…
    So, I do the budgeting thing by using the BEST budgeting program ever. It cost me $60 initially, but has saved me SO SO SO much money since then. It’s at http://www.youneedabudget.com

    So yea, for people who don’t like to carry around gobs of money, this can be a great alternative for them. I recommend it in every conversation about money I have with people. :)

  16. says

    oh, i love the polka dots! i’ve been using cash and the envelope system for years. nothing keeps you on budget at the grocery store like the fear of having to put something back because you went over and the bank cards are in the car! Polka dots make everything more fun. Even budgeting!

    • says

      Maybe if you had a monthly money meeting with your husband, so that both of you are on the same page? My partner and I are great communicators, but nothing that’s “inside my head” is going to be tracked and followed by anyone else. It helps when he has a say in making that plan, too. My priorities may be different than his. Having it in writing (and anything pictorial I can include) really helps my partner understand our plan stay on track with our mutual goals.

    • CTY says

      Here’s a thought.
      When my son was in 7th grade (a long time ago, when beepers were popular) he had to invent something. He was privy, quite by mistake once, to our credit card bill (because of my reaction when I opened the bill) & DH and I had been spending without the other knowing. Even though the purchases were needed the high bill was not expected by me. My son’s invention was this. When a card is swiped at a store and gets its authorization, a similar authorizing request is sent to the spouse via a beeper. The spouse then has the option to authorize or not. I think it would be great for a college kid on the parents dime ($145 at Joe’s Pizza- uh that’s a no.)
      His teacher did not like the idea and made him pick something more scientific–obviously she was single.

  17. Landon says

    My hubby is an accountant & a business Professor at a local college. He’s awesome at money management & we are both HUGE penny pinchers. We buy everything on credit cards simply because the statement is a very easy way to see at a glance what we spend & where. We have 2 major credit cards that are both rewards cards. We use one as the main card & the other as an emergency backup or for when a place doesn’t accept our main card. Our main card earns points that we can redeem for free nights at our favorite hotel chain, so that makes for affordable vacations too. The other card we redeem points for free gift cards to restaurants or stores that we frequent. It works well for us. We know what we can afford to spend & pay off in a month’s time & we pay it off monthly, so never have to pay interest. =)

    I can see where the envelope idea would be tremendously helpful in learning where to start, or to curb chronic over spending. I love the idea of the envelope system & think it will be an awesome way to teach our teens money management, especially since the oldest is so close to the moving out on his own stage & seems to have no clue of where to start.

  18. says

    This is PERFECT! My sister-in-law as been using envelopes for a long time now but they are just so unappealing. I am printing these now and know that I will want to use them because they are adorable. Thanks! :)

  19. says

    My hubs and I have facilitated 3 Dave Ramsey FPU classes so far. It is the BEST! It has really turned our life around and gotten us out of debt. Another good resource is Mary Hunt at everydayCheapskate.com. If you can, PLEASE find an FPU class and take it! Then, get your kids to take it! It really changes your life and everything in it! Your marriage will improve and we have found that once we began to get our finances under control the rest of our lives began to get controlled as well–our marriage, weight, and all aspects of our lives benefited! And once you pay for the course, you can take it as many times as you like after that for free to refresh you and get you motivated and on the right track again. We use the envelope system all of the time and wouldn’t be without it! And you are right–having some blow money is really important–even if it is just a bit of money to blow on whatever you want without anyone telling you what you can use it for. It’s a lifesaver! And a marriage saver.

    Great post! So important!

  20. CTY says

    Jillee– LOVE Leslie’s idea of a credit card sleeve. I can also attest that this system works. I used it exclusively before the age of online banking. It also helped me feel better about money because I could see what I had instead of what I owed on a credit card at the end of the month. Online banking has changed my budging world. Income goes in automatically, recurring bills and monthly payment drafts (for things like insurance instead of being hit with $800 all at once) come out. Online–payment is immediate, no money orders to buy, checks to write, no postage & the money saved on these things can go to pretty envelopes. Here in S. Cal gas is as much as 12 cents cheaper/gal. for cash use– so hello pretty envelope.

  21. Heidi says

    I do something a little different. My check is deposited directly into two accounts…one that is our bills/food/gas basically weekly expenses account and the other for our savings/house/insurance account. So each week a certain amount is deposited into my checking account and once it’s gone for the week, it’s gone and we have to wait until next week. We don’t “dip” into the other account because that money is where our house payment is taken out and our insurance money is kept until it is due. It works fairly well for us and by allowing a certain “extra” to go into savings, we find that when something unexpected happens like the washer dies, we have the money to actually get a new one! (Experience speaking on that one! LOL.) I think the important thing is to find something that works for your family. My friend does the envelope method and was able to get their family out of debt after a couple of years of using it so it really does work if you stick too it! I love your cute little envelopes! I like the idea of doing that for Christmas….an envelope for each member of my family sounds like a really good idea to stay on track! Maybe starting next year, budget in a little bit each month and then the Christmas money will be there without any debt! Great idea!

  22. CTY says

    Sorry– but had an afterthought.
    A great way to introduce this system to your kids. Cut apiece of card stock paper the size of a dollar, stack new dollar bills on top (as many as you can afford/like). Hold together with a binding clip and then use rubber cement to clue the top sides together (checkbook style). Once dry place inside one of those free check holders. I did this for my son when he was on his mission, he loved it ( I wrote a note on top saying–Dad & I opened this checking account for you; when you are out of checks you are out of money). He said tearing out each bill really made him think. Also lots of comments from cashiers–is this real? He’d answer, “yes, my mom made it”

  23. sage_brush says

    This is a great post Jillie! I’ve been doing this for the entire 32 years of my marriage. When I say I divvy it up to the nickle – I mean it!

    One thing I would like to mention (as an old pro at this method) have an envelope specifically for appliances. Just recently I paid cash for a new refrigerator. Always assume that one of your appliances is going to completely break down and need replacing. I also have an envelope that I put $5 a week in just for piano tuning. When it reaches $95 dollars – I call my tuner. This is very important to me, and it’s wonderful to have my piano tuned every 19 weeks. Even veterinarian costs are set aside this way. It is so stress relieving.

  24. says

    I started a cash budget with envelopes about a year ago, and it has really helped me (and especially my husband) budget. I’ve simplified it and no longer write on the envelopes what we spend, which lets me keep the same envelope until it’s worn out instead of only until the blanks are full. I love those polka dots on yours. I’m thinking I should switch to some cute scrapbook paper for ours. I used cardstock because it was so sturdy, but I could cover that with a pattern. Thanks for sharing all your great ideas!

  25. Catherine's not naturally crafty says

    Jillee I love this idea! but I’m not too crazy about using up relatively expensive craft paper every month so I’m going to try using a slip of cardstock printed with the register information and slipping that in with the money, perhaps paper clipped together. That way the nice envelopes are re-usable and I can keep the register slips together and file them to get a sense of the spending trends, that way if I need to adjust my budget, I can see what’s going on over the months. Ooh, I just thought of it, I’ve got some Velcro dots that I can use to make the envelopes re-sealable. Yeah, I’m going to do this tonight!

  26. Danielle says

    Just printed off a bunch of these for my christmas shopping! I’ve put each person’s (or grouped people- like couples, nieces and nephews) name on the envelope and the amount of money to spend. Plus, for those who I have received a wish list for, I’ve printed them off small and tucked them into the envelopes, so that while I’m shopping I have everything together! This year I WILL stick to my budget- no excuses! :)

  27. Miss440 says

    I think the envelope budget system would be great to use as a future reference, (Christmas, taxes, etc). Like others, I don’t like to carry cash with me. My husband and I get paid every two weeks, and our bill due dates are scattered throughout the month. I account what bills are due in between pay periods and write them in my registrar book as if they have already been counted for, then we know how much we actually have left to spend for that pay period. We restrict ourselves from spending on lavish items, unless we know we have enough in our savings, but otherwise we only spend on nessessities, and use other alternatives to save money. The pain in the rear is writing down every transaction me and my husband make and always communicating with each other how much we have left. I must sound like a broken record to him, asking for his reciepts, but it helps us stay on top of our money. One thing that has helped me is downloading a ‘bill reminder’ app. No more late fee’s! Lol

  28. says

    These are so cute! I have a little accordion file for our cash budget, but these envelopes are much cuter and would be more convenient. We follow Dave Ramsey’s baby steps and have for about 6 years. We’ve paid off over $100,000 in debt and are set to be debt free in February or March. I love the freedom that comes from using a cash-only system. Thanks for sharing!

  29. Crystal says

    I love this; I’ve been wanting to implement the envelope system for a few weeks. I was about to purchase the envelope wallet from Dave Ramsey’s website, but didn’t like the idea of not using my cute wallet. This is perfect!

    I only have one question–where did you find the adorable paper? :)

  30. says

    We too started a cash budget system back in July 2012, we only spend what we have. It is amazing how hard it is to spend our hard earned cash on non essentials, compared to when we used credit.

    Love the pretty envelopes, we use plain 1/2 or 1/4 manila.

    Karen

  31. Cori Cox says

    We are on our 2nd month of cash! We use a coupon envelope thing that separates each of our categories out. Its working well. We are struggling with change, when you have to pay someone, like the neighbor selling eggs & don’t have enough 1′s. Or when we buy on Amazon then need to move the cash around & don’t have change. I’m sure we will get it figured out but that has been a pain in the butt getting used to, more than anything else. I love your envelopes, I might have to make some for my fun money :)

    • Julie says

      An idea for the change… which you tend to get a LOT of when you do the cash system, put a jar or container of some sort & put it some place accessible & dump your change in there at the end of the day. When it is full take it to the bank to be counted and either treat your self, or be hard core & put it on the next debt or put it in the emergency fund! The hubs & I have been debt free (including the house – yippy!!) since February. You can DO IT!!

    • Amanda says

      When shopping online you can usually buy a gift card somewhere with cash beforehand. My DH have been doig that and it saves us from having to run to the bank to deposit cash or rearranging things in out bank accounts. We also do a change jar for any we get from everyday spending.

  32. Sarah says

    When living paycheck to paycheck and every bit is accounted for, having everything in cash and not being able to leave something in the bank for online purchases is a real pain. I need to find a hybrid solution that works for me.

  33. Jen says

    Going to try this for sure. My husband and I are going to be doing this in the near future. We will be following Dave’s plan also. Love your ideas. I have passed them on to family and friends and they love them to. Thank you!!

  34. lisa says

    I love this idea but I hae a question. If you use an all cash system to do stop your checking account. My check is payroll deposited and I have several bill pays that already come out, ie, cell phone, car note, insurance. Can someone explain. Or perhaps do you withdrawal all cash, place in envelopes and use money orders…Sorry I would like to use it but sounds confusing.

    • says

      Hi Lisa! I would definitely not stop using a checking account. I’m assuming it would be a little difficult to pay most of your bills with cash. The envelopes are more for things like groceries, gas, clothing, etc. So basically things that you are buying in person that you can easily pay for with cash. I think it’s still a great idea to do automatic bill pay for things that are due every month. That way you always know they’ll be paid on time and you don’t even have to worry about them!

  35. jenn says

    These envelopes are cery cute! I have been using a system like this for awhile–I actually hate my debit card! I always forget to record my spending and I end up with only 29 cents left in my account before I know it. If I watch my cash disapper, I’m more likely to spend it wisely.

    I’m going to print a bunch of these out for my handmade Christmas cards.

    I love your ideas, Jillie :) You are my pinterest favorite!

  36. Marla says

    When I printed these I used left over scrapbook papers from my sons birthday party. Really Cute Argyle, Plaids and Paisley patterns. I don’t want to add to my monthly expenses of paper & Ink for new envelopes every month so after printing needed envelopes I then covered them in clear contact paper I had in my art supplies. This way I can use a fine tip wet earase marker, wipe clean and reuse month to month!

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