The envelope method of budgeting may seem a little outdated, but combining cash and credit cards into a hybrid method might just be the answer to your budget needs.

Feeling financially unstable often stems from being unable to properly manage your money.

If you’re living paycheck to paycheck, struggling to pay off debt, or just want to feel like you have more control over your money and what you spend it on, the first step is to get on a budget.

Budgeting can seem overwhelming at first, but it’s simply a spending plan for your money and should help you get organized and feel more at ease.

One of the best classic budgeting styles around is the envelope method. This method is great to help you avoid overspending because you literally break up your spending categories with different envelopes and place the necessary cash inside to cover your spending for the month.

Once all the cash in the envelope is gone, you won’t be able to spend any more money in that area.

You can also move money around by borrowing cash from another envelope. Let’s say you need an extra $15 for groceries. Perhaps you can take that money from your ‘entertainment’ budget category envelope.

While this method sounds flawless and easy enough to implement, it can become difficult to stick to if you’re not used to using only cash.

If you have automatic withdrawals set up for convenience, you can still use the basic principles surrounding this budgeting system.

Here’s how you can make the envelope method the best budgeting method for you.

Only take cash out for variable expenses

The best way to go about using this method is to ease into it by attacking the main categories you tend to overspend in. Often times, that includes variable expenses like groceries, dining out, entertainment, fuel, household items, miscellaneous expenses, etc.

It’s so much easier to overspend in these categories since you already know how much your rent/mortgage, cell phone, and car payments will be.

Withdraw enough cash for these categories only, then place them in dedicated envelopes. Continue to spend and live as you normally would but realize that budgeting with cash and envelopes will most likely allow you to stay within budget.

It’s more difficult to go into debt if you’re just spending cash. According to this study, credit cards drive more impulse purchases because you don’t have to open your wallet and actually be honest about how much money you have to spend.

Keep money in your account to cover digital payments

If you have automatic bill pay set up or automatic savings contributions scheduled each month, it may do more harm than good to withdraw all your money and place it in envelopes all the time.

Some companies and creditors even prefer you pay your bills online in order to receive discounts and may even charge you a fee for mailing in a payment. For example, if you have student loans, your lender may provide an interest rate reduction just for setting up automatic monthly payments.

Since it may cause you more stress to mail out several different payments each month, keep some of your money in your checking account but continue to track it with the rest of your budget categories.

Be sure to keep track of which expenses you’ll monitor on your bank statement and which ones you’ll monitor with cash envelopes.

Track debit and credit card spending with Mvelopes

While the traditional envelope budgeting method does seem a little dated, the Mvelopes app allows you to use the same principle to break up your credit and debit card spending into virtual envelope categories.

It’s only four dollars per month to use the app’s basic features which allow you to manage and track your spending anytime, anywhere. You’ll start by easily syncing your credit, debit, and other financial accounts.

Then, you’ll create your budget categories so the app can track your spending and warn you before you overspend. When you spend with debit and credit cards, it’s easy to wonder where some of your money went at the end of the month.

Mvelopes eliminates much of that feeling by allowing you to assign a purpose to every dollar just like with the traditional envelope budgeting system, and you can still earn those credit card reward points and cash back you desire so much.

Mvelopes offers a 30-day free trial so you can try the app out and decide if it’s right for you.

Check out some other budgeting apps, if you don’t think Mvelopes is for you.


The envelope budgeting method can be a great way to help you regain control over your finances and tackle common financial obstacles like:

  • Paying off more debt
  • Freeing up enough money to save
  • Avoiding overspending each month

It’s important to assess your needs and current situation to figure out which variant of this method will work best for you. If you favor cash, feel free to use physical envelopes for the bulk of your spending.

If you’re like most of us and spending all cash is not ideal, seek to create a hybrid method by tracking automatic withdrawals on your own or using the Mvelopes app to assist.

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