The idea
People used to put cash into labeled envelopes: groceries, fun, clothing. What is in the envelope can be spent – nothing more. Digitally it works the same way, just without the cash: every category has a budget, and every expense reduces it.
How to get started
- Subtract fixed costs such as rent and insurance
- Spread the rest across the categories you can influence
- Start with a few envelopes – groceries, fun, miscellaneous
- Review after a month and adjust the amounts
When an envelope is empty
You have two options: move money from another envelope or wait until the next period. What matters is that you make the decision consciously – that is exactly what makes the method work.
Leftover money
If something is left in an envelope at the end of the month, you can roll it into the next month, for example for a bigger purchase, or move it to a savings goal.