How I Use Envelopes to Save and Organize My Money!

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Before I started couponing and when we were living paycheck to paycheck I used the “Envelope system”. Honestly, I have never learned much about this concept nor did I know that a lot of money guru’s endorse it. I purely did it because it was the best way for me to feel organized, use my scarce and important money wisely and put it where it was suppose to go.

I have a secret…I STILL do it! I LOVE envelopes! Every time I go to the bank and deposit a check and get my cash back I ask them for envelopes.

 If you’re not sure what I’m talking about, let me explain it:

I take our paycheck and divvy it all up to the bills I pay every month. So, my piece of paper would look something like this (varying depending on your monthly bills, this is just an example):

Check $xxxx.xx

Cable – $50

Gas $150

Food $100

Credit card $50

Utilities $200

House payment $1500

Extra $20

Dog food $40

Cat food $20

Then, I take the items I would be getting cash back for (Food, Extra, Dog food, cat food). If these were my bills, that would mean I need 4 envelopes.

I also need to figure out what money bills I need for these envelopes so each envelope contains it’s proper amount of money. So for this example, I would need:



I would then take the (1) $100 and place it in the envelope I label with “Food”. Take (1) $20 and put it in “Extra”, take (2) $20’s and put it in “Dog Food”, etc.

This is so extremely helpful….it really keeps you organized and it helps you to stay committed to ONLY spending that amount on the specified item which will keep you in your budget.

Here’s how I look at it….if I went to the bank and took the total cash back which in this example would amount to $180 and just stuck it in my wallet. I may be more tempted to spend $130 on groceries since I do have $180 – then I would be short in my other categories. Where as with my envelope system, when I go to the store, I know I only have that money allocated for those items so I am not tempted to spend more than what I have in my envelope.

It sounds so simple (and it is) to make such a huge difference in your financing but let me tell you, for some reason, this little secret works wonders!


  1. victoria rodriguez says

    I do this and it helps A LOT!

  2. My grandmother gave me this idea when we first got married. I agree- total concept of what you have and what you need.

  3. We’ve been using an envelope system now for almost 5 years and LOVE it!!

  4. Brittanie P says

    Wow Great Post! I have never heard of this before and I am going to try it! I thought it was easier to keep track of bills by just having everything run through my checking out! This seems to work better! Question: what do you do with the extra money? Put it in savings or use it for anything extra you want? for example: you have $100 for food but only use $80 what would you use the extra $20 for?

    • I put my extra in a savings envelope

    • I keep the extra money from each envelope in the respective envelope. Say we don’t spend as much money this budget cycle on Eating Out/Entertainment then we’ll have more money in there next time around so we can either save up for a nicer dinner or tickets to see something. My grocery budget is pretty balanced so I never roll an overage for too long in it. If I don’t spend it one week I’ll most likely spend it another week.

    • I use the envelope system too. My extra money goes in a glass jar for something extra like a spontaneous date night or taking the family to the movies.

    • Elizabeth Tierney says

      Extra money should go to your emergency savings account (should be 4-6 months of salary saved, which is usually around $10,000 for the average person). If your emergency savings is where it should be, the extra should go towards an extra debt payment- mortgage, credit cards, etc.

  5. I do this too and it is by far my favorite way to organize and track our money. Old school or not…it helps us stay on track!!

  6. I use gift cards to budget- that way I can’t cheat myself and dig into other envelopes

  7. I don’t get it.

    • What do u not get? Dave Ramsey endorses this system too. Check out his site to see if maybe it goes in more detail.

  8. I leave the extra in the envelope and let it float from month to month. That way if a month comes and I need more groceries for example, I have it in there. A barbecue or birthday might mean I buy a few more things and I don’t have to budget the extra groceries.

  9. Thank you! It sounds simple, but to know that people really do this and benefit from it gives me some confidence. We are stuck in the credit card rut- paying with a credit card and paying it off…except now we are carrying a balance. I might do this with the paycheck instead and just really work to use only that amount! Thank you for sharing and everyone for their comments!

  10. Allyson Edwards says

    My husband and I have been doing the envelope system for over two years and have paid off $40k in debt. We use them in conjunction with the Dave Ramsey Debt Snowball and love it. Its strict and takes discipline but worth it!

    • Saralynn Goepfrich says

      We love Dave Ramsey. I use the envelope system because of him. We have been debt free for 3 years now because of following his advise & using the Debt Snowball.

  11. We use the envelope system. Before that we used credit cards and paid them off every month, worked for a while but it was too easy to overspend. The envelope system keeps you on tract and my husband even likes it!

  12. I use this as well but mostly for things I need to save for. For example: Each paycheck I allocate a certain amount that goes into envelopes labeled vehicle registration and maintenance, furniture, appliances, holidays and birthdays etc. This way when my car registration comes due I don’t have to put it on a credit card because it was a surprise- the money is already put aside. Same with Holidays- I can take the money in my holiday envelope to go Christmas shopping and know what my budget is.

    • Saralynn Goepfrich says

      I use a similar system for this, but I keep it in a savings account and have an Excel page that tells me what the money in the account is allocated for. The interest we earn on it over the course of the year gets added to our emergency fund.

      • Did you get the excel worksheet from somewhere. I would love that.

        • Saralynn Goepfrich says

          Mine is a form I made in Excel based on one of the worksheets Dave Ramsey uses. It is a pretty basic form, just a list of what the money in the account is for, with a total at the bottom so I know the figures match what’s in the account. It keeps us from spending that money on other things.

          Going through Financial Peace University saved us financially. We were over $60,000 in debt not counting our house. Now we’ve been debt-free for over 3 years (except for the house). It’s a lot of work & commitment, but it is SOOOO worth it! Check out “The Total Money Makeover” from your library and read it…it can change your future if you’re willing to do the work.

  13. I think this is a great method. I think I am going to try it a little modified. But I think it will definitely keep me on target for my budget. Thanks for the tip.

  14. This would be great for me as well…. However, we’ve been using our SouthWest Credit Card for almost a year now for all of our purchases… And then paying the credit card off every 3 days that way interest never accrues. I would love to do the envelope system, but being about to get points for flights (I have saved up a total of 3 total free flights in less than a year) is important because we travel to see our family…. hmmm

    • You could still use the envelope system and every time you use your card, remove the money from the correct envelope and put it into a “pay off credit card” envelope. That way when the bill comes, all the money is in there 🙂

    • Is that a typo in your pay that credit card balance off every 3 days? How do you manage to do that? I’ve been thinking of making copies of the bill portion that you send back with your payment and if I have extra money that I can send toward the outstanding balance, mail an extra check. Does that make sense? I can always white out any information that doesn’t apply.

  15. Awesome post! I often take out $50 at the beginning of every week for groceries and that’s our limit for the week. Once it’s gone, it’s gone. However adding in more envelopes for gas, eating out, etc. is a great idea!

  16. I have done this money envelope budget for 30 yrs. I put money in bank when bills are due. It’s the only way I can be sure I have the money when due. My daughter has followed this same procedure, it works GREAT!

  17. I do this too! It takes some time to set up and sort each week, but worth it!

  18. Question? All of my bills are direct withdraw from my checking so if I am taking out physical cash and placing it in the envelopes wouldn’t that require me to have to go back each time to redeposit that cash to make sure its in there in time for my bills to come out. I get paid monthly and that is direct deposit as well with the State? Thanks

    • Saralynn Goepfrich says


      You only use cash for certain items like groceries, clothing, entertainment…things like that that aren’t regular payments like your bulls. I have done it for years, and when I get out of the habit I find myself going over my budget more often than if I know I have a certain amount of cash.

      • Shellie-I get money on card also therefore use my card for food, gas, etc. so therefore I wouldn’t benefit from this. I pay all my bills and rent on the first then whatever is left I use to pay for food and whatever else I need.

  19. This is a great idea…very simple and easy to follow & use. TYSVM for sharing with us! It reminds me of my mother…she used envelopes and different compartments in her wallet…it worked great for her when we were growing up. And, she always had a few places she stored “Wild” money…kind of like your extra… love the idea Thanks =)

  20. Thank you! I need all of the help I can get. We are barely making if pay check to paycheck!

  21. Peggy Einsla says

    I also do this, and I am probably always do it because I love it! Envelope Queen I am! 😀

  22. This sounds like a good system n I want to try it!;)

  23. My household is comprised of my husband, me and my mother-in-law and neither of them wants to set a budget. I think I can do this just for my own money. I really want to be responsible when it comes to finances. I’ve heard of this before but thank you also to the commenters I learned more.

  24. Since we still pay check to pay check, using my debit card works just as good for me…I KNOW I can’t spend anymore than what’s allotted for each item. Wish that would work for my hubby though! 🙂 I have a friend who used to take her total tax return and put it into envelopes too pay bills for a few months.

  25. I have always paid for my groceries in cash…it keeps a person honest. If I take $25 into the grocery, and I have $22 of planned purchases, I am not going to go to the junk food aisle and buy the $6 tin of nuts that is so tempting me today. Because if I do, I am going to be totally embarrassed when the cashier asks me for $28 and I can’t come up with it, I am going to be that person who has to decide what to put back to make my bill match my funds…I don’t go over, but the way! Ikeep a mental tab on my purchases and never have gone over unless I was willint to spend that ‘extra’ I set back for something special!

  26. How do you adjust your envelope money if there is a good sales going on for groceries that you can stock up your pantry for that particular month ?

  27. Elizabeth Tierney says

    Dave Ramsey’s “Financial Peace University” is very helpful.

  28. Elizabeth Tierney says

    Dave Ramsey’s “Financial Peace University” is very helpful.

  29. Elizabeth Tierney says

    Dave Ramsey’s “Financial Peace University” is very helpful.

  30. I sorta do the envelope thing without the envelope. I just put it in a separate spot in my wallet on a side pocket or something like that. Like if i’m going to go to the water co first I put it in the first cc spot and just pull it out when I get there. I organize them all like that (2nd cc spot, 3rd etc for each location). Then I know what I have to spend and don’t overspend because if i don’t see it for some reason i am better lol.

  31. I have tried this before, and failed, but maybe I can get it again

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