The envelope method—it’s a classic approach to managing your monthly budget. Here’s everything you need to make one yourself!
Build your budget with our ready-made money envelope template—just enter your numbers and it does the math for you. This template works whether you’re using physical money envelopes, the spreadsheet alone, or your Simple app to manage your budget!
Your download will be an Excel file—you can also upload it to your Google Drive and convert it to a Google sheet if you prefer!
Check out some example scenarios below so you can see the envelope method in action.
How to make budget envelopes
The envelope method is simple, intuitive, and time-tested. You decide how much you’ll spend on your expenses, label an envelope for each one, and then fill each envelope with money. You can do this with actual envelopes and cash, or do it digitally. (Pro tip: you can make digital envelopes right in your checking account with Simple.)
Then spend from your envelopes! For instance, next time you’re deciding whether to order a pizza or cook at home, grab your “takeout” envelope. The money inside is how much you have for the month! When it’s gone, it’s gone—so you won’t accidentally overspend.
How to make your envelope budget: 5 steps
- Calculate your income: Enter your total monthly take-home pay (after any taxes or deductions). If you have more than one income source, be sure to add them all so you’re accounting for all your money!
- Organize your expenses: List out all your monthly expenses—one item per line—and the amount you plan to spend on each one. These are your envelopes. If you’re saving up money, make an envelope for that too!
- Check and adjust: Total up your income and your expenses, and compare the two numbers. If you’ve got more income than expenses, hurrah! You can allocate that money to savings, paying down debt, extra fun—wherever it makes sense for your financial goals. And if you’ve come up short, it’s time for some tweaks: this article has some handy suggestions.
- Make your actual envelopes: If you want to go old school, grab a box of envelopes and a stack of cash! If you’d rather do it digitally, pick an envelope budgeting app (if you’re a Simple customer, it’s already built in) and set it up.
- Use your new system! It’s time to take your budget into the real world. Spend from each envelope as needed, and just look in your envelope to see what you have left to spend for the month. Expect to learn and adjust as you go!
Envelope budget examples
You’ll want to adjust the budget envelope template for your own situation. We’ve put together some example budgets for fictional people (based on real-life circumstances) to help you see how the envelope budgeting method can be applied.
Example 1: Meet Angel and Morgan
Angel and Morgan are making a joint budget together. Angel is an epidemiologist for the county health department, and Morgan is a teacher at a private school. They own a house in the suburbs of a large city, and their biggest financial challenge right now is Angel’s mother’s increased caregiving costs. They also both have high student loan payments. Let’s see how Angel and Morgan do it.
Monthly income = $7600
- Angel’s take-home pay of $4600 per month
- Morgan’s take-home pay of $3000 per month
Monthly expenses = $7800
- Mortgage payment: $2000
- Angel’s mother’s home health care: $2000
- Student loan payments: $1500
- Water bill: $100 (billed quarterly, so they divide by three to get a monthly amount)
- Weekly movie night: $120 (they multiply by four to get the monthly cost)
- Scrubs for Angel’s job: $30
- House projects: $150
Angel and Morgan create line items for each of their expenses, add them up, and then compare the total to their income. As you can see above, they need to trim their expenses a bit or find additional income to cover all of their costs. Once they get that squared away, they finalize their budget—and since they’re already banking with Simple, they use Expenses and Goals to create and fund their digital envelopes. They agree to have a monthly money date to check their progress and make adjustments as they go.
Example 2: Meet Yasmin
Yasmin is a college student studying graphic design in a big city. She just moved to her own apartment, which she shares with one other student. She has a part-time work-study job, another part-time job waiting tables, and she picks up a little extra cash from time to time driving for an online food delivery service. She also gets some money for living expenses from her student loans. Her goals are to pay her bills on time, slowly build an emergency fund, and save up for a new laptop.
Monthly income = $3000
- $1000 from work-study job
- $800 from waiting tables (varies)
- $1000 from student loans
- $200 from food delivery service (varies)
Monthly expenses = $2975
- Rent: $900
- Art supplies for school: $50
- Gas: $150
- Parking pass for school: $60
- Budget cushion: $100
- Savings for emergency fund: $100
- Savings for laptop fund: $200
Yasmin enters her expenses into a spreadsheet, one per line, as well as her income. Then she checks to see if she has enough income to cover her expenses. Notice that she’s created an envelope for a “budget cushion”—because her income varies, she wants to put a bit aside so she’s got some left over for next month if her tips or gig work income is lower than usual. Next she makes digital envelopes for each expense in her app. She decides to check in with her budget once a week and make tweaks to ensure she stays on track.
Make it work for you
Here are some tips for using the envelope budget method:
- Make sure you list all of your expenses, including the ones that happen less often (like Angel and Joe’s quarterly water bill). Just divide the cost of the expense by how often it comes up to get a monthly amount for those expenses so you’ll have the money when you need it.
- Check in often; weekly is a good frequency. Some things won’t turn out how you planned—that’s how you learn. Just make some adjustments and try again next week!
- It’s also okay to switch up your strategy. Different methods work for different situations, and you might need to try a few things to find what you like best. Want to explore other strategies? Here are more budget templates you can try!
- Have a lot of unknowns in your budget? It can be tough to plan for fluctuating income and expenses, but we’ve created some resources to help if you manage a mostly-variable income or a lot of variable expenses!
How to make an envelope budget in your Simple Account
Did you know your Simple Account has a built-in envelope system? Just set up an Expense (that’s your digital envelope) for each of your line items (and make a Goal for your savings line items).
And Safe-to-Spend® always has an instant answer to that perennial question—“Can I afford this?”—so you can spend spontaneously with confidence. Give envelope budgeting a try and get your cash flow sorted.
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