Why I Use an Envelope Budget

Two years ago, when I first started using an envelope budget, I was unsure of what to expect and skeptical at best of what would come out of my 30-day experiment.

At the conclusion of my Mvelopes trial, I was hooked on this method. Mvelopes was a great introduction into envelope budgeting in the modern world, where true “cash” spending is hard to do for all bills and purchases.

For more information on the program, read my updated review of Mvelopes.

Here are some of the benefits of using an envelope budget:

Paradigm Shift

I couldn’t help but throw in that classical self-help cliché at the top of the list – using an envelope budget is a paradigm shift.

Your budgeting mindset quickly changes from a reactive/monitoring status, to a proactive/planning status. You begin to see that you are in control of your money, not the other way around.

Savings Goals

One of the best and most immediate uses for an envelope system is the ability to create an unlimited number of savings goals. You can save for anything from a trip to see your sister to an elective medical procedure you need to undergo.

With the confidence that you’re saving adequately every month, you can be sure that when the time comes, you’ll have the money required to come through unscathed.

Irregular Expenses & Big Purchases

Instead of taking on debt or not being able to afford the big purchases most families make (can you say, Christmas gifts?), you can spread the expense over a longer period of time and save incrementally.

For example, let’s suppose that every January, you spend $600 on a professional association fee that’s important for networking in your job. That’s quite a hit when you’re unprepared for it.

But suppose you can put away $50 every month, which doesn’t seem nearly as hard. In 12 months, you’ll have enough to pay your fee without blinking an eye. It’s that simple.

Can We Afford That? – No More Guess-Work

When my wife used to ask me this question (or when I asked it myself), I never really had an answer.

I knew our account balances, and what our budget allowed, but I was never quite sure whether we could really afford to buy something without a little bit of guess-work and a splash of faith that everything would turn out OK.

That’s no longer the case. I can immediately look up the exact amount available for any potential expense and make an instant decision about the best use of our money. I can buy something with peace of mind, or refuse to buy it with a strong understanding of why (as opposed to “I don’t think we can”).

Lots of Tools

As I already mentioned, I’m a big fan of the Mvelopes budgeting software for many reasons. One of the reasons my wife loves Mvelopes is the relative ease of use when compared to software like quicken.

There are a few other options for modern envelope budgeting, including YNAB (You Need a Budget 3.0) and Common Cents. I used to prefer Mvelopes exclusively for my budgeting, but have since began experimenting with some of these other software options.

Envelope Your Way to Financial Success

I’ve been using the envelope system for a little more than 2 years, and I’ve grown addicted to the effects it can have.

I’m more confident of my financial choices, my mind is at easy of where our money is going, and I’m focused about achieving our money goals much sooner than expected.

Photo by pareeerica

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4 thoughts on “Why I Use an Envelope Budget

  1. Well-written, easy to read post. Very nice.
    We have just begun an envelope system as well but it has not gone well. We had a minor disaster with the bank and pulled all of the cash out of our dear little envelopes to cover unexpected charges from the bank. It was a two day nightmare.
    I was very sad and discouraged at first that all of my hard work at figuring out how much to put into which category had all evaporated.
    After a week’s perspective, however, I realize that the system can still work, I just need to tweak it a bit.
    Best of luck to you! I’ll check back in to see how you’re doing.
    Morgan

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