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Money Envelope Update


First I’d like to say happy Memorial Day to all! I hope you have an opportunity to spend the day with your loved ones! Thank you to all who have served, are serving, or are spouses/family of Service Members. I don’t know how you do what you do, but I am so thankful you find a way!

Remember how I decided to do a “Money Envelope May” challenge? I had intended to do an update post mid-month with how it was going, but time got away from me (or I had more pressing things to blog about), so now that the month is nearly over I decided I’d just do a wrap-up with how it all went and my impressions.

I started the month with 5 money envelopes:

  • Groceries = $380
  • Entertainment = $20
  • Eating Out = $75
  • Personal Maintenance = $20
  • Other = $125

I was not thrilled about the idea of money envelopes. When I first wrote about it, I talked about how I thought they are bulky, annoying, and just a big hassle. Now that I’m about a month deep in using them I’ve given my personal pros and cons below:



  • I still find them to be bulky. I am used to either NOT carrying a purse (just throwing wallet and phone into the diaper bag), or carrying a tiny purse (I have too much baby stuff to carry for me to deal with wrangling a big purse). When I started Money Envelope May I had to bust an old (larger-sized) purse out of my closet because the envelopes simply wouldn’t fit into my smaller purse. How men (or women who do not carry purses) do a money envelope system????? I have no idea.
  • You have to be very careful with balancing your envelope (like balancing a checkbook). I have never been great about this, which is why I LOVE debit cards. I know I have roughly “X” amount in my account so I can go to the store and not worry about the exact amount because I know I can always look it up later online. Not so much with a cash-only system. I thought I was diligently “balancing my envelope” (I don’t know what else to call this – but basically I was tracking my spending and how much money is leftover on the outside of my envelope….writing straight on the envelope)….but somehow I must have messed up. The only envelope that gave me a problem was “groceries.” Last week I noticed that I must have forgotten to write down a purchase because my envelope said I should have $105, and instead there was only $88 inside. I racked my brain and could not for the life of me remember where else I’d made a purchase. I know it must have been my mistake (not me misplacing money or something), but its still annoying to feel like I just “lost” $17.
  • I worry about the money getting lost/stolen. This was particularly tough the first couple days, as the envelopes feel very awkward and bulky. I was SURE I would drop an envelope full of cash or someone would reach inside my giant purse and steal it without me even realizing. I also had random fears that someone would see my cash-laden envelopes and try to rob me in a parking lot while walking out of a store. I feel much more protection with a piece of plastic because if it gets lost or stolen I can simply call the bank, have a hold placed, and get a new card issued. There’s a sense of security to it all that I lack with cold hard cash.
  • Annoying for online purchases. I wrote a post about how I got a “free” (paid $2.99 for shipping) beauty box last week. That $3 came out of my “personal maintenance” envelope….but I had to pay for it online. The way I handled any such purchases (e.g., I also paid for a couple itunes songs), was to remove the money from my envelope and put it in my wallet. Since I wasn’t using my wallet for spending, the money was basically stored safely there and when I got around to it I would deposit it back into the bank. It’s a little bit of shuffling, but not too bad.


  • Useful for storing receipts and coupons. Clearly I still had a problem with my “grocery” envelope, but I wasn’t storing receipts at the time (though I’ve started since then). But one thing I really liked the envelopes for was storing coupons!!! I’m not a big couponer, but I do clip the occasional coupon. There is nothing more annoying than going to the store, wanting “X” product, and realizing I have left my coupon at home. Argh!!! Or how about actually getting the coupon, shoving in purse, and somehow having it lost or forgotten about by the time I’m checking out (this has literally happened multiple times). Now when I make a grocery list, I see if there are any coupons I want to use and tuck them safely inside my money envelope. It’s ideal because then the coupons are stored safely together instead of getting crumpled, torn, or accidentally tossed out. And they’re right next to my cash so I don’t forget to use them when I’m checking out (The Worst!)
  • They curbed my spending. They really did help me cut back on my spending! I was surprised because I really wasn’t expecting for there to be that much of a difference, but simply being very cognizant about my spending and where my money was going helped me to cling to it a little tighter. Times when I might have been tempted to throw that extra item into my cart, or to grab an afternoon “happy hour” soda from Sonic, I was able to resist because I knew I was trying to spend less. And it worked. Isn’t this their primary purpose?

Sooo, I guess I have a lot more “cons” than “pros.” I hadn’t intended it to be that way, but this is my honest opinion. Even in spite of the plethora of cons, the money envelope system WORKED for me! Because of that one simple fact, I think I’m going to keep the money envelopes around for another month. I still prefer plastic over cash, but I think I need to get a couple months of cash-only spending under my belt before I revert back. Clearly they helped me curb my spending and that has been my goal, so there’s nothing bad I can say about that!


Have you ever tried a money envelope system? Want to join me for Money Envelope June (not quite as catchy as Money Envelope May, lol)?


  • Reply Kili |

    Hi Ashley,
    have you looked into digital envelop systems as well? Not sure how they work but maybe you’d be more comfortable with one of those…
    instead of carrying all of a months money, could you just set up the same envelops as home as well, so that you don’t carry around 380 $ of grocery budget but only e.g. 100?

        • Reply Julene |

          A bunch of us in my office use YNAB (You Need a Budget) and it has a tracking app that you can use on your phone (or on your PC). It is not free and can seem a bit pricey at first but has saved me so much money in the long run and does go on sale occasionally. I designate a certain amount in my budget category and then “track” my debits and put them towards a specific category as I go. It tells me how much I have left in that category or virtual envelope and then I don’t have to carry cash. That said, sometimes carrying cash is still the best way to prevent unnecessary spending. Congrats for sticking with it!

          • Ashley |

            What a great idea! YNAB rings some vague bells so I must have heard about it at some point but have never looked into it personally. I’ll have to check it out. Thanks!

  • Reply Mary from SC |

    We started using the envelope system this month also. It has helped control our spending. The bulkiness is also a huge con to me. However…It works. We are out of grocery money as of Saturday, so for a week, we eat what we have. This may spur me on to giving coupons another try. At the end of the month, we will have a choice to put all monies left towards debt or roll it over. Most will go towards debt but for our personal allotment, I will roll this over for next month as some friends and I have a special girls night out planned. I also had an Operation Christmas Child allotment. I only spent 4.00 of that money but back to school items will be dirt cheap soon and I want to be able to take advantage of the great deals…so this will be getting rolled over…all other categories will go towards debt. We have five primary categories…groceries, personal spending, money allocated to go take care of my elderly mother weekly, Operation Christmas Child, and restaurants. I am sure we will adjust and fine tune this but it is working. Happy Memorial Day.

  • Reply TPol |

    Thanks for sharing your thoughts on the envelope system. A few times I wanted to use the envelope system but never got around doing it. I diligently follow my purchases online every day so I had given up the idea. Bulkiness is a problem for me too since I do not like to carry around big purses. Sometimes I just use my backpocket for a small wallet like men do.

  • Reply Jenna |

    if you take a look on etsy there are some super creative people who have made envelope wallets. [search term: “budget wallet”, “cash budget wallet” or “envelope wallet”] the prices can be pretty crazy [read: not budget friendly] but the inspiration is there to possibly doctor up something you likely already have a home into something more practical.

    I gave a half hearted effort once to envelopes and failed the tracking aspect of the process.
    I’d be willing to join in and give a June challenge a go!

  • Reply Tammy |

    One solution would be to carry one envelope, maybe the “other”. When you get home you could move the money around to replace from the proper envelope. We have used the envelope system for a few years now and it has worked well. I do carry a debit card if an unexpected expense comes out or I spend more than I expected on groceries. I usually stay within budget, but I don’t sweat it if I go over by a few dollars.

    • Reply Ashley |

      I have thought about carrying a single envelope and transferring money but my fear is I would screw up the envelope “balancing” even more!

  • Reply CanadianKate |

    Not sure if this would work but what about one envelope with 5 3×5 cards inside, one for each category with the balance written at the top. Attach a pen or pencil to it (or put it in the envelope.)

    After EACH purchase (right there, before you leave the cash register), write in the amount spent and deduct from the total. Before you go shopping each time, pull the card to see how much you have to spend in the category. Pop the receipts (and coupons) into the envelope as well.

    This system would solve all but the ‘You have to be very careful with balancing your envelope’ cons and still give you the benefits of envelope budgeting.

    I learned about this from my aunt when I was a teenager. She took me to the bank with her to withdraw her weekly budget money and when she received the cash, divided it up into the envelopes and explained to me what she was doing. I have seldom worked with the system (I didn’t have to because virtual envelopes worked fine for me) but that was my introduction to budgeting and it came at a perfect time in my life. Within just a few years I was married and managing our small amount of money very carefully (and successfully since I don’t have to worry about money now in my golden years.)

    I do work with cash whenever spending starts to get out of control, though. January has always been a cash-only month as we recover from Christmas’ extra expenses. It never ceases to amaze me how using cash cuts spending so dramatically. That’s why I recommend variations of the envelope system to people – not so much for the envelop itself but for the switching to cash.

    • Reply Ashley |

      I thought about doing something similar with a coupon organizer (like a mini accordion file folder). I still don’t think I could ALWAYS balance my envelope immediately….sometimes things just come up (big rush, crying toddler, etc.) But I still think I could circumvent it as long as I save the receipt and put it into the envelope (or coupon organizer thing) to be balanced later. I’ve just become so accustomed to refusing receipts or throwing immediately away (since I can always look up purchases online) that I have a tough time hanging onto them! But I’ve gotten better at just shoving into the envelope, which allows me to update the budget at a later time.

      • Reply Shoeaholicnomore |

        I’ve been doing the “envelope” system for all of 2014 so far. I use an accordian style “coupon holder” from 31. It works well for me. I just wrote the category on each tab in the coupon holder and put my money inside. I like that it zips so change doesn’t fall out and get lost in my purse.

    • Reply Julene |

      Good idea for using it when you need to “be sure” you don’t overspend or need to be careful.

  • Reply Ange |

    I have used the envelope system for years, but what i do, is i leave the envelopes at home, and when i’m about to go do groceries, I just take the money out from the “groceries” envelope, and put it in my wallet. Then if there is any money left over, when i come home, i just put it towards another envelope, or put it back in the “grocery” envelope, for next week. It also prevents you from taking money from a different envelope, if you go over your budget.

    I like what CanadianKate requested, about using the 3×5 cards. That way, you can still keep track of your spending, and not have to carry around the envelopes.

    • Reply Ashley |

      At first I tried to do this, but what happens when you’re out-and-about and have an opportunity to pop into the grocery store (or pharmacy, or wherever) really quickly and you realize you don’t have the correct envelope? So annoying! So I feel like I “have” to carry them with me all the time (though you’re right that the index card thing that Kate suggested could work)

  • Reply Ashley |

    I do the same thing as Ange. I just put what I need in my wallet. I actually get my cash out weekly since we are paid weekly. It keeps the bulk way down and then when it’s gone, it’s gone. My favorite envelope I do is save money monthly for Christmas. Last year was the first time I did this and it was so nice to have an envelope full of cash and not be stressed about money in December. I get $50 out a week for groceries and $50 for fun/eating out. One week after I got it out my purse was stolen. The money was gone and that was such a bummer! Other than that, the envelope system really works for us!

    • Reply Ashley |

      I like the idea of saving money throughout the year for Christmas. I haven’t tried this yet (though I did establish a savings for this year), but I can imagine it makes things so much more fun and less stressful to already have the money put aside!

  • Reply Mary |

    I have used the envelope system on occasion. Currently, I am trying to get back to using the envelope for the fast food category since that is one where I use my debit card for convenience.

    For errands, this is what I have done for years and that works.
    1) For groceries, I go through the sale flyer prior to going to the grocery store and highlight on my grocery list the sale items. I print off any coupons on the internet ahead of time. I staple those to the grocery list. I keep the grocery list in my household manual under the grocery tab until errand day. I keep the sale flyer in a plastic page protector behind it. If anything comes up, I can refer to it prior to going to the grocery store.
    2) .On errand day, I plan my errands out in distance order on my to do list. (I keep a hard copy of my daily routines and on the back of it, I write my to do list.)
    3) I place everything I need to take with in my errand bag-grocery list/coupons, items to return if any, fast food coupons, etc. As a general rule, I place fast food coupons in a plastic page protector and leave them in my errand bag.
    4) When I get to the place I am going, I grab the items I need for that store out of the bag. I LEAVE THE BAG IN THE CAR.
    5) When I come out of the store, I toss my receipt in the bag since I’ll deal with it when I get home.
    6) If I want fast food, I’ll use a coupon, if there isn’t any money in the envelope I’ll go home. I typically like fast food on errand day so I try to plan well.

    Once I get home, I empty the errand bag and put it away. I record all of the receipts on my budget sheet and file them. That way, I know what I have spent for the month. I don’t use the front of the envelope to record my receipts or spending. I just use the outside of the envelope to record the amount in the envelope. I know how much I will be spending BEFORE I go into the store so I am careful not to go over. Remember, the envelope is not your budget.

    I think it’s great you ate at home. If you like pizza, why not make pizza dough ahead of time. I make pizza dough and cut it with a dough cutter into enough dough for small size pizzas. I place each dough piece in a plastic bag and store two in the refrigerator and the rest in the freezer. When I want a pizza, I flatten out a piece of dough, add the toppings (onions, garlic, broccoli, oregano, cheese) and cook in the oven. Only takes 12 minutes. If I am tired, it might just be sauce and cheese on top, lol. I make my own pasta sauce and make new when I run out but you could use a store bought sauce.

    • Reply Ashley |

      Mary – Thank you SO MUCH for sharing! I feel like I just got a plethora of ideas! How long does pizza dough store in the fridge for? I usually make 2 at a time and plan to use within a couple days of each other, but I made 2 last Monday (a week ago), and never got around to using the second dough. Now its a week old and we already have dinner planned for tonight so I know it won’t be used at least until tomorrow. Can dough last over a week in the fridge? I would hate to throw out but don’t want to get sick either!

      • Reply Mary |

        Not sure how long the pizza dough lasts. I think it would be fine. I typically use mine within a week and as long as it’s not “gummy” it’s o.k. It will be a little sticky and you add flour and then flatten it out. As a general rule, I tend to eat everything I make within a week and by the time I go grocery shopping the fridge is empty.

        You could also buy small pizza crusts that are pre-made. Mama Mary is a brand I liked and used (much better than Boboli). There were natural ingredients that you could pronounce and it was really good.

        • Reply Jim |

          Pizza dough tastes best within 24 hours of the dough rising. But in restaurants they usually have a hold time of 3 days max. With that said, I know many people freeze pizza dough, and that hold time is 3 months I believe. (Not sure on the last part)

    • Reply CanadianKate |

      Mary, I love the idea of using physical envelopes for the budget areas that are most likely to be abused! And fast food is definitely one of them. Not for me currently (there’s only pizza within a 10 minute drive of here and no place delivers) and since my gall bladder was removed I have to avoid all kinds of junk food, some is okay but too much is a big problem (today is a bad day for me and I’m still not sure what pushed my system over the edge.)

      I’m moving in a month and will have all kinds of options nearby, all of which my dh wants to try out. He doesn’t understand that our long retirement (he semi-retired at 53) is based on a continuation of our careful budgeting habits, so this will be a challenge. Yes we have the money but only because we don’t waste the money we have and I’m not about to add another $50+ per week to our budget just because he wants to eat out more. My health couldn’t take it, let alone the budget!

    • Reply Ashley |

      This is a full-sized according file thing, right? I thought about doing something like this with a coupon organizer (same concept, just smaller). I don’t have one but I think I’ve seen them at Dollar Tree before so I’ll have to check around and see if I can find one cheap.

  • Reply Christi |

    What about a prepaid Visa (or some other type) of card for each ‘envelope’ instead of cash? I have only used these when I have received them as a gift so I am not sure if there is a fee associated with “reloading” them.

    • Reply Ashley |

      Hmmm, good question! I know there’s an initial fee when its purchased but have no idea about reloading fees? I should look into this – good idea!

  • Reply Marcia |

    I am trying to think back to how I got started on my budget system, but since we’ve been married 52 years, that was a while back. I basically used two tools: my budget notebook and PAYROLL SAVINGS.

    My budget notebook is just a small notebook–5 subject size lasts me about 5 years. I just use one page a month and write down what bill need to be paid. If something unexpected comes up during the month, I write that down too. Also (nowadays) online purchases, and any charitable contributions I send out, doctor bills that come up etc. I also write myself notes towards the bottom of the page such as : homeowner’s insurance due in July–save for it. I hate to pay interest charges so try to pay annual things in one payment. That wasn’t possible when we were younger, but it is now.

    I didn’t work until my kids were about 10 and 12, but we always had payroll savings. When my husband was in the military, we bought savings bonds, and then when we had to move to a new assignment, we could cash in bonds for travel money if needed although we always tried to save ahead for that too.

    At first it wasn’t discipline–we just didn’t have any money left at the end of the month! I think at first we had $15 a month for “discretionary spending.” Those were the days when a nickel for a frozen Snickers bar at the corner store served as “dessert.” When I started working, I always kept a Christmas club. We have a large family who always exchanged gifts, and there just was no other way to afford Christmas without saving all year. This is the first year I have not had a Christmas Club since the early 60’s. (Part of the reason is that we have a nestegg now and it will cover our spending, but it’s also a chaotic year for finances as we are old enough to be required to take money from our IRA’s, and also, I am in the process of settling my Mom’s estate, selling her house, etc. so our income will change this year because of that. )
    When I did work, every time I got a raise of any sort, 1/2 went into payroll savings and 1/2 went into my paycheck. We always got more for spending but also developed that SAVING habit at the same time. Later those payroll savings went into IRA’s when they came into use.

    I know this is a little off topic from envelopes, but they are things that have worked for us now for many years. I retired at 59 1/2 because our mortgage was paid, our kids were finished with school, and I was tired of the stressful job I had. My husband retired at 62. He had NO pension so we were always aware that we HAD to save in the IRA, and we really stressed that once the mortgage was paid. (Also paid the mortgage off nine years early by paying extra on each payment once we could afford it.) Above all, we have pretty much always lived BELOW our means. It’s hard to do that, but knowing you won’t have a pension is a pretty good motivator. We have ALWAYS had a vacation every year since the kids were school age anyhow. I have become so single-minded about saving that I just DON”T spend unless it’s something we truly need. Yesterday I decided I needed a couple pair of capris, and spent half of my leftover money from CHRISTMAS gifts to me. I still have $50 left of that. It’s a HABIT to not spend and after you establish the habit it gets easier and easier.

    Sorry to write so much–but I like to share what I have learned, most of it the hard way!!

So, what do you think ?