Where the name comes from
People used to cash their paycheck and split it into paper envelopes: rent, groceries, fun, so the money wouldn't get spent by accident. When the groceries envelope ran out, you either stopped buying groceries until the next paycheck or took cash from another envelope to cover it.
How it differs from a usual budget
Plans with money you expect
You plan the month around what you'll earn, then find out at the end whether the plan held.
- Paychecks expected this month$4,800.00
- Planned spending$4,300.00
- Planned savings$500.00
- Actually saved?
Plans with money you have
You put every dollar in your account into an envelope before you spend it, so you know what's left at any moment.
- In your account today$2,400.00
- In envelopes$2,400.00
- Money to assign$0.00
Budget the money you have
A paycheck counts once it's in your account. Then it goes to Money to assign, not straight into spending.
The paycheck is expected, so there's nothing to assign yet.
Put every dollar in an envelope, before you spend it
Decide now what each dollar is for, until Money to assign reaches $0.
Move each slider to give that envelope part of the $2,400. A slider stops when there's nothing left to give.
Spend from the envelope
Before you buy something, check its envelope, not your bank balance. Each purchase comes out of it.
Tap a receipt to log it.
Overspent? Choose where it comes from
Going over doesn't wait for the end of the month. The money has to come out of another envelope, so you see what it really cost and decide what gives.
- A usual budgetGoing over shows up at the end of the month, if you look, and the next month starts the same way.
- An envelope budgetThe envelope turns red the day it happens, and you cover it from another one before you move on.
Cover the $60 from:
A road trip cost $60 more than Gas & Transit had. Where should it come from?
What's left rolls over
Money you didn't spend stays in its envelope next month.
September
The end of September: two envelopes have money left.
Big bills, a bit each month
Set aside $60 a month and a $720 yearly bill is covered when it arrives.
January: $60 set aside.
Paying with a credit card
A card purchase still comes out of its envelope, and the same amount moves to Credit Card Payment. When the bill comes, you pay it from there.
You spend $50 on the card.
- Your bank balanceDoesn't change. The $50 still looks like yours to spend.
- Your envelopesGo down by $50 right away. They show what's really left.
If an envelope didn't have enough, cover the difference from another one, like any overspend.
Tap a card purchase to log it.