I am really excited about this post. I found this new software/excel spreadsheet called Excel Check Register Spreadsheet w/ Envelope Budgeting. That’s a mouthful I know, but I will be explaining it here, and I can assure you that it will make budgeting a lot easier for you and it’s really just cool to use. I know, I know, I’m a nerd and I get excited by these things.

What is Envelope Budgeting?

Envelope budgeting is a method where you take your income, convert it into cash, and then allocate your cash into different envelope categories. These envelopes are labeled for various categories of spending including required spending, such as your mortgage, groceries, and medical bills, and discretionary spending, such as eating out, entertainment, and shopping. As you divide your cash into envelopes, you can immediately see what on-hand cash you have to pay bills, make purchases, and contribute to your savings.

To use envelope budgeting, first establish spending categories for your budget and then set spending limits for the categories. As with any personal budget, when you add up the spending categories the total must not exceed your monthly income.

Using one envelope per spending category, write the name of each category and the monthly budgeted amount on the envelopes. If you are paid weekly or bimonthly, divide the total monthly amount for each category by the number of pay periods you have and record that number on the envelope as well.

Why Envelope Budgeting?

Envelope budgeting is simple to set up and manage if organized correctly. It may take some getting used to as this system is so unlike the traditional method of budgeting that most people are familiar with.

By funding the different envelopes you see exactly how you can spend your money until your next pay period. This forces you to spend only what you can and rely less on paying bills with a credit card and incurring more debt.

Benefits of Envelope Budgeting

Automated Envelope Budgeting

Now this is the fun part.

I found this really cool and nifty excel spreadsheet that automates the principles I talked about above. This means that you no longer need to have actual envelopes you keep hidden in your closet or table.

How to do it?

First, download the excel spreadsheet here.

The spreadsheet allows you to separate your checking account’s balance — your money — into any of up to twenty-five different spending “envelopes.” All deposits and withdrawals from your account show up as transactions in one or more of your envelopes.

Name, rename, and re-rename your envelopes to your heart’s content. Transfer money between envelopes with a few keystrokes.

Some things to remember while you’re working with this spreadsheet:

Possible Envelope Labels:
Here are suggestions on what to label your envelopes:

The key is to have envelopes that represent your major expenses. Everything else I just put under Miscellaneous. I also like to have a Savings envelope. At the start of every pay day, I put a certain amount to that envelope and allocate the rest of my income to all the other expense envelopes. At the end of the month, I transfer whatever is left in the other envelopes to the Savings envelope.

Split Transactions
Let’s say your visit to the mall totalled up to P620. Of that, P300 went to your dinner expense, you brought load for P200, and you watched a movie for P120. Your spreadsheet entry would look like this:

Saving for Major but Irregular Expenses
Sometimes, we have bills that we do not pay monthly. Let’s say you’re a blogger and that you need to pay P3000 every year for hosting. You can either “cram” the expense or you can set aside P250/month for the next 12 months so you can renew your domain without feeling any pinch at all.

Moving Money From One Envelope to Another
You don’t want this to happen of course. But there are times when it’s necessary to move money from one envelope to another. If you need to transfer P500 from one envelope to another for example, just subtract the amount you wish to transfer from one envelope (-500), and add that same amount to the envelope that needs it (+500). The overall account balance is not changed.

I’m doing this envelope budget system myself, and I really like how I feel more in control of my budgeting. And it’s fun to use! I think we all just need to give it time. It will probably take a few months to perfect your envelope system. Don’t give up after a month or two if it’s not clicking. You’ll get the hang of it and see how beneficial the envelope system is as you dump debt, build wealth, and achieve financial peace!

Good luck!