How To Use The Money Envelope System

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Aug 23, 2019

1. Determine your monthly expenses
Track all expenses for three months. This will help you determine exactly how much discretionary income you have.

2. Create a budget for every expense category
Divide your discretionary income into different sub-categories, like food, entertainment, transportation and clothing costs. Review your spending over a few months to get an idea of how much you’ll need for each one.

3. Create your envelopes
Take one envelope for each expense category and mark it clearly. Put the exact amount of cash you will spend for each category during the month inside the applicable envelope.

4. Stick to a budget
With the envelope system, sticking to a budget is easy. You can only use what’s in the envelope to pay for expenses-nothing more!

5. Reward yourself!
If you find yourself with extra money at the end of the month, you can celebrate with a dinner out. Alternatively, use the money as “rollover cash” to enjoy a roomier budget next month.

Congratulations! You’ve got the money envelope system down pat!