Envelope budgeting
Training 145 minutesenvelope budgeting
You are 45, a hairdresser renting a chair in a salon. Food and fun always cost more than planned, and by month end you borrow from your sister. Time for an old, reliable method: envelopes.
Training goal: Keep every category inside its limit
▶ Play this trainingSituation
- One envelope "for everything", $900
- Four envelopes: food, fuel, fun, misc
- Fifteen envelopes for every little thing
- Take $45 from the food envelope
- Go and pay by card
- Suggest a movie night at home or move it to the 1st
- Spend it before it is gone
- Send the $65 to savings or to your sister
- Add it to next month’s fun
- Drop the method, it only works with cash
- A sub-account per envelope
- Keep the balances in your head
What you will learn
- Every flexible category gets its own limit
- An empty envelope means stop, not borrow from another
- It works on cards too, with separate sub-accounts
Your real-life step
Pick one leaky category, like eating out. Put a monthly limit for it in a separate envelope or sub-account.
Questions and answers
What is envelope budgeting?
A budgeting method where each spending category gets its own amount in a separate envelope. When an envelope is empty, spending in that category stops until next month.
Can you do envelope budgeting without cash?
Yes: use separate sub-accounts, savings pots, virtual cards or an app with category limits.
What do I do with leftover envelope money?
Most people send it to savings or debt. You can also roll it into the same envelope if a big expense is coming.
More trainings in this module
- How to make a budget
- The 50/30/20 rule
- Expense tracking
- Zero-based budget
- Family budget
- Irregular income budget
Numbers are illustrative. A game, not financial advice.