Envelope Budget System Strategies To Take On the Road

For those struggling to get control of their finances, one of the often prescribed measures is to create an envelope system and live on a cash-only basis.  This worked well for us when we initially made our financial turnaround.  We have since graduated to a debit card, but still use envelope budgeting for a couple spending categories that we tend to overrun each month if not kept in check.

One of the knocks of an envelope system is that it is not portable, or that it is difficult to manage when on the go.  Often times I needed to stop by the store on the way home from work, but the “Grocery” envelope was sitting on our desk at home, or still in my wife’s purse from our last shopping trip.  Another complaint is that takes too much to manage.  For instance, a trip to Wal-mart for groceries, shampoo and a new basketball for the kids may require the use of three envelopes representing three separate spending categories.  Below are a few strategies that worked for us when we had to take our envelope budget system on the road.

  • When funding your envelopes, ask for small bills.  This step may require you to go inside the bank to withdraw money from checking, but it is worth the hassle you’ll save later when managing your envelope system. Smaller bills make it easier to move money around envelopes in a pinch, or to settle up from a shopping trip that crossed multiple spending categories.  If the only thing in your envelope is twenty-dollar bills it makes it difficult to incrementally shift things around.
  • Separate shopping carts.  One of the biggest conflicts we had within our envelope system was “Food” and “Household,” because the two categories often overlapped, and because we often picked up items from both lists during the same shopping trip.  When my wife and I shop together we each grab a shopping cart and only place food in one or our carts.  All other non-food household items go in my cart.  If shopping alone you can get a shopping cart, and place one of those hand-held shopping baskets inside the cart to separate items.  I toss things like shampoo, razor cartridges, over-the-counter medicines, etc. in the hand-held basket, while freeing up the shopping cart for food items.
  • Review receipts when you get home.  Depending on the crowd at the checkout line we may run each shopping cart through as a separate transaction.  However, if there is a long line, or we’ve selected a cranky grocery clerk, we’ll often ask the cashier to subtotal the items on the receipt for us after running through each spending category.  We pay for the entire balance by grabbing enough cash from one or all of the envelopes and settle up when we get home.
  • Leave grocery envelope in your car’s glove box.  After the initial grocery shopping trip of the month (or pay period), consider stashing your “Grocery” envelope in your car’s glove box.  For added security, you may want to lock the glove box, unless you need access to something while driving.  This way, if you are out and about and see a sign for a great deal on boneless chicken breasts you don’t have to go all the way home  just to get your food envelope.
  • Create a sub-envelope, or two.  Another way to take the envelope system on the road is to save those envelopes you get back from the teller when making cash withdrawals and use them to fund smaller envelopes that stay in your wallet or purse.  For a while, my wife and I did this with our “Household” budget envelopes.  Our household budget was $150 a pay period and included things like diapers, baby supplies, cleaning supplies, etc.  My wife kept $50 of the envelope money in her wallet inside a teller envelope labeled “Household.”  If she saw a great deal on diapers somewhere she could pick them up without having to return home, or carry the entire envelope system with her.  We simply replenished her sub-envelope from the one kept at home.  Note, this method does take some discipline–just because you have money in your wallet doesn’t mean you have to spend it!

The envelope system is a great budgeting tool, particularly if you are new to budgeting, or are having trouble sticking to a budget, as we were.  The visual reinforcement of peering into a nearly-empty “Entertainment” envelope when considering a day at the movies forces you to find a frugal alternative.  As you get more disciplined it might make sense to move to a debit card for added convenience, or even run everything through a credit card and pay it off each month (this takes maximum discipline and I do not recommend this method for non-essential spending categories).  However, most people who give the envelope system a try find it to be a great budgeting tool.  By implelementing the ideas above you can improve the system even more by improving its portability.

For additional portable envelope budget system ideas, visit NeoBudget.com.

Do you know how much cash you spent last month?


  1. I was adamant about getting my wife onto MY budget system until I finally realized that each person needs to find the system that works for them. Turns out this was it, now I’ve seen the light!

  2. If you’re looking for a good online envelope-based budget system, check out NeoBudget (www.neobudget.com). We are currently working on a mobile version which will work on your PDA, which would solve the “portability” problem mentioned in this article. It’s pretty easy to set up a budget, and there’s a 1-month free trial to test it out and see if you like it.

  3. I still am a fan of the envelope system after trying everything in the book. Sometimes simple is just better!

  4. I love the idea of the envelope budget. I do something a little different, but the same idea. I have my budget laid out each month. I then break it down each week and carry that cash with me. I don’t put them in envelopes, but I keep track of it just the same.

  5. I do essentially the same thing except that I have about 8 sub-accounts at my bank whereby an automatic amount gets transferred each payday to the different sub-accounts to be used for a specific purpose.
    It’s not as concrete as the “Cash” plan, but works for me. * This requires the ability to have free sub accounts at your bank.

  6. One of my biggest problems is buying things from many categories at the same time. I do tend to ask for small bills and when I get home and go over my receipts and divide things up. It just doesn’t always work out exactly and it is time consuming.

    Sometimes if I forget cash, I will use my debit card and then take the cash out at home and use it to pay for gas in the car. We usually use our debit card for that, so I just rearrange some.

  7. We did this for awhile until we paid off our credit card balances. Now we use credit and pay it off every month. But the envelope system is a great way to get used to reigning your spending in to a certain amount. You get a feel for what a certain amount of groceries will cost.

  8. Love the envelope system. It works great for us. It makes you question, as well as appreciate every single purchase. It’s like going back to basics where cash is king.

  9. We’ve been doing the ES three years now. We started it because we were facing a financial need to control every single cent to make it through the month. One thing we learned was how much we were spending on stupid things and what is really necessary and what is not. We do carry these categories in the glove compartment in the car: GAS, Haircuts, Carwash. We are moving to carry also the groceries ones since sometimes we forgot the envelope the groceries days; and we found ourselves paying with the card and then paying the card with the cash (ridiculous). We also kept the groceries envelope at home since we have specific dates for groceries, but again… if we had to buy something and we didn’t had the envelope we were using more money. Also I recommend to have a calculator when doing the groceries. We’ve found out ourselves, buying more that the amount set apart for that week, then we borrowed from the next week, then the last week we were borrowing from the bank… and it made the whole envelope system not work as it was supposed to.

  10. I sure do wish that I was the owner of that envelope.

    I can dream can’t I?

    I use the envelope system. It was didfficult getting used to but we are working out the kinks. The biggest drawback is that we collect our money in envelopes to then have to carry it back to the back to deposit to pay our online bills.

  11. We use the envelope system, but we only withdraw funds for those things we purchase locally such as groceries, eating out, etc.

    We also have a miscellaneous envelope we withdraw. This helps to take care of purchases for those items that do fit nicely in another category.

    I think it is perfectly fine to purchase some things on a debit card as long as you start the month with a zero-based budget and keep track of your spending.

  12. We have used the envelope system and a zero based budget for years and are very happy with it. The coolest change we made was adding a “Love” envelope and budget line. We only spend this money when together and without the kids.

  13. Can’t you just carry cash with you and settle up with the envelopes when you get home? Carrying these envelopes around seems cumbersome. But I guess if it works for some people then it’s good.

    I heard of some just keeping the totals on paper in a checkbook or wallet, and subtracting from the proper category when the $$ was spend.

    I just throw $300/month in my wallet – cash. That’s groceries, gas, garage sales, gifts, and grandkids. When it’s gone, it’s gone. I always have some leftover at the end of the month tho. I know that $300 is my budget for all those things each month. Where it goes within those categories doesn’t much matter to me, cuz that’s all I allow myself.

  14. Wow. This sounds like an awful lot of work. We do budgeting with Quicken. Since you can import all of your purchases (we always use plastic), you can get a daily snapshot of your budget every single day with no effort. Then, you can adjust your spending accordingly. Sounds like your method works for your readers but my general philosophy is that if its too much work, I generally won’t do it.

  15. I was an all plastic user as well. Never again. The ES rules the world, and I would recommend it to our government, when the money is gone you physically cannot buy anything else.
    We have two checking accounts, one for online bill pay. This is the first stop for our paychecks. From this we pay bills and transfer funds to another checking that we use debit cards with. This is for gas and groceries (we include things like shampoo, toothpaste, personal care items in groceries). The rest of our money we take out in cash for things like auto maintanence, clothing, saving for christmas and vacation, dining out, home improvements, etc. I have an excell spreadsheet that I fill out each month with the amount for each category and I go to the bank knowing exactly what I want back in cash. So many fifties, so many twenties and so on. Then it is easy to fund each envelope.

  16. The best thing that has happened to my finances since Dave Ramsey has been Moneywell by No Thirst Software.

    Check it out!!!

  17. For years we tried the envelope idea – but when you are on the “run” and stopping at five different places from the food store, to the drug store, get a haircut, etc, it can get out of hand – now with years of grown-up discipline we KNOW out budget for the month – Pay ouselves first (All retirement accounts, savings, vacation funds, etc.) then we have an account that we deposit to every month for property taxes, all insurances, yard care, all subscriptions, and a misc. expense amount (for car repairs, dentist, doctor co-pays, etc) – all this is based on the previous years expenses and I add 10% for the new year. Then the balance is for utilities, food, gas, and whatever. Since you really do have a household spending pattern and only you know what it is for your house – I think you don’t need the envelopes – because if you need envelopes you probably rob peter to pay paul anyhow….

  18. I’m trying to come up with catagories for a very irreguar income and get myself a woking budget. what catagories does everyone use?