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Budgeting In Style: Exploring the Envelope Method!

by J. Money on Tuesday, February 10, 2009

Budgeting in style with envelopesAre you a fan of the “envelope method”? If you don’t know what it is, it’s basically a system where you take chunks from your paycheck every pay period and plop a certain amount of money into a designated “envelope”.

Then, when it’s time to buy something – groceries, clothes, whatever – you pull this $ from the corresponding pouch and you’re good to go.

I actually haven’t tried this myself in all honesty, but I know a lot of bloggers and friends that swear by it. In theory it works out well because you can only spend what’s there. On the other hand you’d have to convert your checks into cash every time, or visit the bank since ATM’s only pump out a certain amount per day. Not the hardest thing to do (I’ve enjoyed cashing it out before! REALLY makes you realize how much you have), but it’s not as easy for someone like me to do every 2 weeks. Again though, if it *works* then keep on doing your thang.

Most people work it out with plain white envelopes, but I say hook yourself up with some sexy a$$ creations from my girl over at Chicky Finance! She just came out with these hand-made green & white envelopes over on Etsy (pictured above) and they’re labeled and everything – Grocery, Clothing, Entertainment, and Health/Beauty. She’s selling them for $20 with no shipping costs, and will even custom make other categories upon request. Totally awesome if you’re looking to jazz it up a bit ;)

Of course, there are other ways to budget this way too. Instead of physical envelopes, you can go electronic and set up “sub-accounts” with ING Direct to basically do the same thing (although it might be better for “saving funds” like for traveling, auto maintenance, emergency funds, etc, but not sure). There’s a great post from Get Rich Slowly that breaks it down pretty nicely, and if I weren’t so hardcore for USAA I’d totally hook it up. There’s also downloadable software you can find online like MoneyFolders.com which promotes features like “printable wallets” or “purse balance cards” to help gain control of your money.

Or you could even use your credit card for this stuff, and at the end of the month pay it off in full and go over what you spent for which category. This one has its fallbacks like overspending & not remembering/being able to pay it off in full, but it’s great for those who want super simplicity – aka me :) Not sure if it falls directly under the “envelope system” like the others, but it’s still a cool budgeting tool.

In other words there are a TON of ways to budget – and all are sexy if they WORK. Unlike math class, there are not right or wrong answers here. Only those which help save you money, and those which help take it away. I’m all about the first one ;)


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{ 4 comments… read them below or add one }

1 jamie masterson November 21, 2012 at 10:10 pm

That’s funny they call me J-Money around the firehouse. I have modified the envelope system and use a spreadsheet instead of envelopes. The money stays right in the bank and I track it on my spreadsheet.

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2 J. Money November 23, 2012 at 3:12 pm

Why hello there fellow J-Money ;) I’m a big spreadsheets type of person too, so looks like we’ve got even more in common!

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3 Mark November 29, 2012 at 9:43 am

We love the envelope method. We found a site called “easy envelope budget aid” and it works perfectly. You can track your expenses online and on your cell phone. We’ve been using that site ever since we got married about a year ago for our budget. My wife was VERY hesitant at first regarding using a budget, but she’s really taken to it and loves that she can check on our envelopes on her phone.

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4 J. Money November 30, 2012 at 3:01 pm

Oh good! That’s the best when you finally find something that WORKS. I’m glad to hear it :)

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