How to Save More of Your Paycheck With Just Some Envelopes

My Envelope Method for Money Management

About 15 years ago, around the time I got out of college, I came up with a method for budgeting my monthly spending, and therefore saving more money, simply by using a few envelopes. Over the the past decade I’ve actually seen a few other articles written about this as well, so I guess I’m not the only one who has come up with this idea! Budgeting is the most powerful tool you can use to manage your expenses and increase your savings, and I found my Envelope Method to be a very easy and useful way to budget.

Sticking to your Budget

The envelope method is all about forcing you to stick to a budget and making it so simple that you don’t even need to track your spending. There are only four steps:

  1. Come up with a monthly budget
  2. Get a few envelopes
  3. Stick money into envelopes
  4. Only pay for stuff in cash taken from those envelopes

All you have to do is break down your monthly budget into a few key categories. For example, it could be something like groceries, eating out, future car maintenance, vacation, and miscellaneous spending. I’m assuming rent and utilities won’t be possible to be paid in cash so you can leave those out.

You then label each envelope with each budget category name. Decide what your monthly budget should be for each category, write that amount on the envelope if you wish. Each month withdraw enough money from the bank for the whole month, and put your whole monthly budget for each category in each labeled envelope. All of your spending is done by taking out cash from these envelopes when you plan on using it. If an envelope becomes empty, you can’t spend anymore money in that category for the rest of the month.

This will teach you to have and keep a budget without needing to spend the time and effort tracking your spending. The envelopes automate the process of tracking a budget. Each envelope will simply become empty when you hit your budget!

Saving with Envelopes

Obviously by creating a budget through the use of the Envelope Method, all your income above and beyond your budget gets saved by staying in your bank account. The envelope method simplifies your ability to stick to a budget, and therefore it simplifies your ability to save more money!

But beyond simply increasing your savings in the bank, you can also set aside money in some ‘savings’ envelope(s), which could be saving for a vacation or for some big ticket item or whatever other medium-to-long-term expenditure you are trying to save up for. That way you gradually and methodically save for something because you make it part of your budget. Furthermore, if any of your envelopes still have money in them at the end of the month, you can throw that into your vacation/big-ticket-item envelope to reward yourself for coming in under budget.

I found the Envelope method to be extremely helpful in keeping a budget and saving money without any extra effort required on my part. If you have trouble managing your money, or just want some help in keeping your budget down, I highly recommend trying this out!

American nomad, semi-retired/entrepretrying, coder, cryptocurrency investor, dog owner, burgeoning human. Briefly caught across a few ordinary moments in time.

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