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Make Budgeting Easier with Envelopes

You may have heard about the envelope budgeting method before—it's been around for a while! This budgeting method uses cash envelopes to help you visualize your spending categories. Envelope budgeting is one of the simplest, easy-to-follow budgeting systems, which is why it's been so popular over the years.

If you haven't found an easy budgeting method that works for you yet, give the envelope system a try!

What is the envelope budgeting method?

The envelope system is a cash-only budgeting method. You decide how much you want to spend on certain categories, then use envelopes to divide your money. Using cash for every purchase makes it difficult to overspend!

How does envelope budgeting work?

Separating your money into individual envelopes is one of the best ways to gain control over your spending. To set up your own envelope budgeting system, follow these steps:

  1. Start by thinking about the types of expenses you have each month and sort them into categories. Examples of budget categories where you are likely to use cash include groceries, gas, restaurants and entertainment. 
  2. Use previous account statements to determine how much you tend to spend in each of these categories. Or, divvy up your money based on your future spending goals.
  3. Label envelopes with each budget category. Be sure to write down the amount you have budgeted for each category on the outside of the envelope. 
  4. Each month (or after each paycheck) withdraw cash and fill the envelopes. 
  5. When you go shopping or out to eat, spend only from the designated envelopes. Once you've emptied an envelope, you're done spending in that category—try not to dip into another envelope!   

​Bonus tip: To track your spending, keep receipts in their respective envelopes. You can also write down each transaction on the outside of the envelope. If you have extra cash left over at the end of the month, great job! Instead of spending leftover money, deposit it into your savings account or use it to pay down any debt. 

Digital Cash Envelopes

If you don't like to pay with cash, you can still use the envelope method. One way is by setting up setting up additional Wright-Patt Credit Union sub-savings or checking accounts. This can easily be done by stopping in to a Member Center near you or calling our Member Help Center! You can open as many as needed to fit your budgeting goals. 

Once you have set up additional accounts, simply fund them by making transfers from your main account, using the same process noted above. 

Plus, with Money Management, a free digital service available through Wright-Patt Credit Union's Mobile and Online Banking, you can track and categorize your spending from all your financial accounts—including credit cards and accounts you have with other financial institutions. You can even set up alerts to notify you when you're close to your spending limit in a category. To learn more about Money Management, click here for an interactive demo.

Final thoughts

Following the envelope budgeting method takes discipline, but it's well worth it! When you track your spending and make a plan for every dollar, you'll be on your way to reaching your money goals and achieving greater financial flexibility and freedom.