Living with credit, Shopping

4 easier alternatives to the envelope budgeting system

Taylor Tompkins

Every Thursday, this young guy would come like clockwork into the north San Antonio bank branch where I used to work as a teller. Clutching a handful of labeled envelopes, he would wait patiently for me to fill them with cash. 

He was in some form of sales, and he would never tell me exactly what he did. He always wore slightly wrinkled T-shirts and cargo shorts. He wasn’t very friendly or talkative. His focus was always on the envelopes.

Some days he would have a stray couple of dollars left in the envelopes, but more often than not they were empty. He wanted precise amounts of certain bills, which he crammed neatly in specifically labeled envelopes.

“It’s that envelope budgeting thing,” one of my co-workers explained to me one day when we were swapping stories about eccentric regulars that frequented our bank branch.

The theory, better known as envelope budgeting system, has been touted by many a financial guru over the years.

Subscribers to the theory juggle several envelopes, each dedicated to one category of shopping. They only spend the money they have in the envelope on that category, and when they’re out of money, they have to wait until the next pay day to replenish the funds.

I’ve toyed with the envelope method on and off over the years, but it has always seemed cumbersome and outdated to me. The envelope method is limiting because it disallows the use of any kind of plastic and it doesn’t help you build your credit history. Besides, I could never stick with all those envelopes.

To circumvent my issues with the envelope system and leave no excuse for lapses in self-control (I am looking at you, very expensive spiralizer sitting in my Amazon cart), I brainstormed some ways to hold myself accountable and stick to the metaphorical money in the envelope.

Use techy budget-tracking tools.
There are some great apps to help you stick to your budget, and some are even a digital twist on the envelope theory.

  • Mint: I am a big fan of this app that connects to your card and automatically populates what you spend (although sometimes it needs help categorizing spending). Mint also sends you weekly emails about what you spent the most money on each month, which is guaranteed to guilt you out of buying so many double dirty chai lattes. Not that I would know from experience.
  • Goodbudget: This app allows you to set your categories and how much you can spend on each, just like the traditional envelope system. You fill virtual envelopes with your money and can set them to automatically refill after each pay period. Goodbudget also can be used by multiple spenders, so it’s handy for families.
  • Mvelopes: This app aims to help set up an envelope-like budget that is good for those trying to get out of debt or save for a big purchase. Mvelopes gives users guidelines for each spending category, and it includes a group of financial planning resources. Mvelopes allows users to capture purchases in real time so that what you bought is instantly taken out of its virtual envelope.

Categorize credit cards to boost rewards.
To get more rewards and keep track of your purchases in categories, consider using specific credit cards for specific types of spending.

Some cards give more miles or cash back based on where you’re using them and what you’re purchasing. For example, it may be frugal to charge all your gas expenses on a card that gives a high percentage in cash back, and use your other cards in other categories that will earn you the most rewards.

Using different cards for specific spending categories might get dicey for those with little self-control, though, as you’d have to ensure you can pay off your credit card balances at the end of each month.

Because we’re in the digital age, there’s an app to help you get the best rewards with each charge. Wallaby is an app that detects which card will get you the most rewards on purchases. It’s also available as a browser extension for all those nasty online shopping habits.

Keep a spending journal.
Some people are tactile learners. Pen to paper may be the best way for them, and many say money journaling has greatly helped them to monitor their spending.

How to get started: Get a small notebook that’s easy to carry around, make a page for each week, and divide the pages into categories. Or just give each category its own page. Either way, jotting down what you’re spending money on and keeping a running balance will make you aware when you’re hitting your limit for that category.

Color a poster of your spending.
Posters are the new envelopes. Crafty posters are a method I use for tracking my savings, but this could easily be adapted for envelope budgeting. 

How to get started: Get a poster board, detail your categories and draw bars (or cats, dollar bills or whatever strikes your fancy) next to them with the total amount you want to spend. Get your poster board laminated, and at the end of the day, tally up your spending.

Using a dry erase marker, color in each category with the respective percentage of how much you spent.

A colorful poster tracking your spending is way more labor-intensive than the other methods and would be best for someone with few accounts or credit cards. But it’s pretty and always in your face – so you can’t forget about it.

And hey, if those ideas just sound exhausting to you and you still want to carry around those envelopes, we at have some tips for making that a little more efficienttoo.

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