The Envelope System: The Spreadsheet-Free Way To Manage Your Cash

Want to get some kind of money plan in place but spreadsheets cause hives to burst all over your face? Then you might like The Envelope System, and No Credit Needed’s video explaining how it works. Basically, you cash your entire paycheck each pay period and then put every dollar in a series of envelopes in different categories, with set limits for each category. Once you’ve spent the envelope for that category, no more spending in that category. Change goes into a piggy bank. Excess left over at the end of the pay period goes into savings or to paying off more debt. As a very “analog” “lo-fi” “old-school” method of budgeting, the envelope system is hard to beat.

Envelope System Video Tutorial (Step By Step Guide To Using The Envelope System To Manage Your Cash) [No Credit Needed]

RELATED: Dave Ramsey’s Envelope System [Dave Ramsey]


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  1. Fujikopez says:

    Yeah, just make sure they’re not left out. Just the other day on a forum I frequent, someone broke into a poster’s home (while they were sleeping!!) and stole their envelopes. Not cool.

  2. Fujikopez says:

    Oh, and homeowner’s insurance wouldn’t cover it because they couldn’t prove they had it.

  3. mike says:

    If budgetting is new for you and you’re having trouble visualizing money, this is a GREAT system.

    The only word of caution: taking home that much money might be a bit dangerous, depending on where you live.

    If the spreadsheet idea doesn’t work, try a money program. Mvelopes is a program that “simulates” the envelope (hense the name) and makes budgetting easy.

  4. teapartys_over says:

    But what about bills you need to pay from your checking account? A modified version of this might be to budget for entertainment, eating out, groceries, clothes, haircuts, hobbies, whatever – and put that money into envelopes to avoid overspending. It seems like too big a pain to take my utility bill money and put it in an envelope, then go somewhere and pay it.

  5. UnicornMaster says:

    I think that’s the idea behind this service: []

  6. pmathews says:

    A more involved solution would be to have different accounts for different expenses. But this is under the assumption that these extra accounts are free (depending on who you bank with).

    On a side note, my wife and I have a credit card that we use exclusively for gas (not for sodas or the like at the gas station). That makes tracking our fuel expenses very easy.

  7. DoubleEcho says:

    You’re only as good as your last envelope.

  8. PinkBox says:

    It sounds like a good idea, but I pay 100% of my bills online, and I really don’t like to carry a lot of cash on my person.

    A much better option would be to create a budget, and have the willpower to stick to it.

  9. LorneReams says:


    You can buy a money order or cashier check. Most banks will even let you have a bank check for free if you have an account in good standing.

  10. tkozikow says:

    How about using Monopoly money as a surrogate? Most of what we spend is electronic (e.g., utility bills, car payment, mortgage), so I don’t see how having a big pile of cash around is all that convenient. Easier to cheat the system, but still provides a useful visual aid IMO.

  11. steveliv says:

    cash, what is that? my wife and i use our checking account to pay utilities, and our AMEX for all other purchases. This makes it easy to categorize and track monthly expenses. Then we pay the balance off in full, and start again and get rewards points as well. unless your are vigilant, cash is untraceable/untrackable and you are left wondering where and what you spent it on.

  12. Jesse says:

    I use the bank account + one credit card for discretionary expenses that’s paid off at the end of the month approach. It’s pretty effective. If viewing the statement balance incites profanities, I spend less the next month. If my bank statement is more than the previous month by a certain percentage of my income, then I know spending is under control.

    On the envelope plan, for those who have trouble visualizing and thus overspending money, this would be a great tool. Although with some bills, it may be very hard to pay in cash, which may require more. But this system is easily modified if you budget and plan your fixed expenses (rent, utilities, etc) properly.

  13. Do people really need a video tutorial of this? If they do, maybe they shouldn’t be allowed to use actual currency at all.

  14. SinisterMatt says:

    I didn’t watch the video (no flash on this instance of Firefox, and I don’t have permission to install it), so if this was covered, my apologies. If you need more cash in a particular envelope (say for food or whatever), just pull it from another envelope, if possible. The idea is to just make sure that you don’t get cash or money from beyond your envelope system.


  15. steveliv says:

    @Jesse: it’s nice to know i’m not the only one who uses the Bank Account + 1 Credit Card approach. this method makes it so easy to track spending, when used in conjunction with a financial software/spreadsheets. i use quicken and a excel spreadsheet which i update religiously, to keep informed of our current spending and financial status

  16. Anks329 says:

    but what about earning a couple pennies of interest by keeping the money in a bank account instead of in an envelope while you’re waiting to spend the money? This seems like a step backwards towards people hoarding cash in/under their mattresses.

    Plus, by not keeping money in the bank, you are making less money available to the bank to lend out to companies, resulting in the economy not recovering as fast as it could.

  17. 556guy says:

    Envelopes are a great plan. My wife and I used it for a number of years when we were first married and it got us thru some rough financial times. Also, as we were paid every two weeks, we took 1/2 of every bill from every check. This evened out the “set aside” required from each check and had the added bonus of having two checks a year that only living expenses had to be paid out of.

  18. adamcz says:

    Not everyone can compound their wealth at 20%+ like Warren Buffett can, but everyone should be able to top 5% easily through a combination of keeping their money in a high yield savings account (there are many online), and investing the surplus in a low-fee index fund.

    This proposed system – yielding a 0% return on capital – is simply astounding. It is exhibit A for the growing class divide in America. People are so dumb with their money, that earning 0% on it is actually an improvement from what they would have otherwise done.

  19. mac-phisto says:

    i just stopped paying bills altogether. much easier on my wallet. no envelopes needed.

  20. mknoll1 says:

    I did a modified version of this when I worked as a waiter. My “week” started on Monday and I put all of my money into a box until I had my quota of $500 in the box. Until then I had no money except for gas and food. Once I had the 500 I paid my bills, car etc and put the rest in the bank for future gas and food. After I got the 500 in there I was free to blow the money on whatever I wanted.

  21. mocena says:

    @NameGoesHere: We do the envelope thing and it has worked well so far. All of our online bills come from my paycheck, but we cash my husband’s check and do envelopes for food, gas, dog food, medications, doctor’s appointments, etc. It helps us keep track of what we’re spending, since we can visualize what is left over. Sure, we could “have the willpower to stick to a budget” but that would require keeping receipts and a log and all sorts of crap that we don’t have time for.

  22. wwwhitney says:

    @adamcz: I practice the envelope system but I definitely don’t take out my entire paycheck every month. Rather, I do direct deposit and withdraw my budget in cash every 4 weeks. Excess money periodically goes to savings account and stocks.

  23. smakdphat says:

    my mother used this system my entire life – even past the point of when she and my father didn’t really have to budget (they did pretty well for themselves). I still have her leather wallet with her envelopes in it.

    It worked beautifully for our family of five when budgets were tight.

  24. Invalid_User_Name says:

    Dave Ramsey has promoted this system for years.

  25. freepistol says:

    my husband does this. he has a habit of not labeling his envelopes, misplacing them, and sometimes moving money around and forgeting.

    but otherwise works well.

  26. Burgandy says:

    What is this cash you speak of?

  27. Blackneto says:

    We started using the envelope system about 10 years ago.
    It’s great for us.
    We don’t worry too much about cash getting stolen. Our city hasn’t been completely given over to criminals yet.
    All bills that can be paid on-line are paid that way.
    we only have envelopes for Food, Clothing, eating out, household needs and Gas.
    if we need more in one category we pull it from another envelope or from the bank after we both agree on it.
    we never seem to be wanting for anything or missing out on any deals.

  28. highmodulus says:

    Wow what a great 1930’s way to store your money. Why use confusing banks, or exercise fiscal self control when you can leave large sums of cash lying around the house.

    What’s next, the 401(k) mattress system?


  29. Jesse says:


    Dave “Cash is King” Ramsey promotes it, so it must be good for you, right?

  30. PeteRR says:

    Let me just jump in my Model A and drive down to the “Building and Loan” to cash my pay check. I guess I’ll stop in the Woolsworth and buy a 5 cent bundle of envelopes to use.

  31. civicmon says:

    people who backpack/stay at hostels do this on round-the-world trips. If your expected budget is $50/day, 50×30 = $1500, stick that in an envelope. By the 20th day, you have a good indication if you’re way above budget, or well under budget. Adjust your fun accordingly.

  32. Mr. Gunn says:

    I’ve occasionally run across some advice from Dave Ramsey, and I’ve always thought it was the stupidest, worst advice I’ve ever heard.

  33. PiggyBonk says:

    Dave Ramsey’s website charged me $30 for a tiny naugahyde/leatherette “envelope holder”, and a half-dozen undersize envelopes.

    If I’d wanted the inclusion of instructions on how to actually USE the sooper-seekrit Envelope System, it would’ve cost me an additional $40.

    Frugal Lesson #478: Avoid Dave Ramsey’s products.