This post contains outdated information. For the latest, jump directly to my 2012 Mvelopes review.
I wrote on Twitter several days ago that I was beginning a 30-day trial of the service known as Mvelopes Personal. My 30-day free trial began several days ago, and I will try the system for the full month, and write a piece at the end of my “experiment” on how well things went.
If you’re not familiar with Mvelopes, the basic concept is based around the “envelope system”. Instead of tracking your money after you’ve spent it, you assign it before you spend it. Each time you get a paycheck or other income, you funnel the money into previously established envelopes (in this case, they are virtual). The amount is established by you based on your needs for that spending or savings category.
As you spend money, Mvelopes connects with your bank, downloads your transactions, and with your guidance, takes out money to cover the expenses from the appropriate envelopes.
If you’re ever used Quicken, Money, or any other traditional system to handle your finances, you would be amazed at the paradigm shift this simple software brings to money management. It’s like working completely backwards with your money – every penny of your available cash is assigned and ready for action before you spend any of it. In many ways, it’s exactly like what a budget is supposed to do. But rarely is a budget this much fun, and rarely is it followed or even looked at until the end of the month – when it’s too late to do anything about it.
So how did the setup go? Fairly quickly, actually. After signing up as a new user and establishing my free trial, I connected to my bank accounts, input my income, set up and funded my envelopes with whatever was available in my accounts, and reviewed the entire system, all in under one hour.
I was sure to compare my available cash with the bills coming in through the end of the month, and fund the appropriate envelopes. I did the same for gas, groceries, and any other basic needs. The remaining cash went into the “savings” envelope in preparation for a transfer to my savings account later on. The entire process was actually a lot of fun.
The system will not replace Quicken by any means. I still plan to use Quicken for account management, bill pay and reminders, investment monitoring, and net worth tracking. But spending and budgeting will be moved entirely to Mvelopes for the month.
This afternoon, I tracked my first transaction – a $25 gas expense, which I promptly dragged to the Auto:Gasoline envelope. The system automatically deducted $25 from the envelope balance and let me know my remaining amount available until the envelope is funded again. Viola!
I will be updating on the results of my experiment periodically, and review the entire system at the end of the month. If you’ve had experience with Mvelopes before, please share your insights.