The Envelope Method to Saving Money

If you're looking for a simple solution for budgeting your expenses, consider using the Envelope Method of saving money to help you keep track.

This is a very simplistic way of creating a budget to pay your bills and save money.  While it is called the Envelope Method, it can be used digitally as well. The envelope system divides your income into spending categories, you will need to decide what categories and how much you want to allocate to each category.  What is allocated to that category is what is allowed to be spent and that is it. The point is to help you curb overspending and sticking to your budget.

Step 1:

Establish your spending categories and budgets. What do you spend money on each week or month? Things such as:

  • Groceries
  • Gas
  • Utilities
  • Dining Out
  • Clothes
  • Household Items
  • Savings
  • Gifts
  • Rent

Steps 2:

Set up and label an envelope (or if you are doing it digitally there are budgeting software available that you can use that will help you credit things to categories to properly account for the spending) and list the amount that goes in it each paycheck.

Step 3:

Pay your envelopes when you get paid based on the budget you set.

Step 4:

Pay for things from the envelope that you set aside for that expenditure. If you spend all the money from one envelope, do not pull money from another one order to continue spending. If you do, it will leave you short for that category. The good news though, if you have money left over at the end of the month from an envelope is you can either choose to leave it there for extra money or you can add it into extra savings or your emergency fund. Having extra savings or extra in your emergency fund is never a bad thing!

If you are having trouble getting started on your budget journey or you need some help reach out to us, we are happy to help you.


Picture of Michael Callahan

Michael Callahan

CEO of Intentional Accounting

Financial Advice

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