Money Smarts Blog

Hey there, friends! Ryann here, your friendly Assistant Branch Manager, and today we’re talking about a budgeting method that’s as classic as your grandma’s cookie jar but with a modern twist. It’s the digital envelope budget method!

Now, I know what you’re thinking: “Ryann, I don’t want to carry around a bunch of envelopes stuffed with cash.” And I totally get that. Who wants to be walking around with a wallet full of envelopes? But don’t worry! We’re going digital with this one, so you get the same benefits of the classic method, without the paper cuts and cash spills.

What is the digital envelope budget method?

It’s exactly what it sounds like: you’re creating digital envelopes for your spending categories instead of using physical cash. Think of it as a high-tech way to keep track of your expenses, with less stress and more organization.

Here’s how it works:

1. Create your categories
Just like the old-school method, you’ll start by setting up categories for your monthly expenses. Common categories include groceries, entertainment, dining out, gas, and savings. Pick the ones that fit your lifestyle best.

2. Set up digital “envelopes”
You’ll need a place to store your “envelope” money. You can use a separate savings account for each category, or you can use budgeting apps that let you create virtual envelopes. The key is that each envelope has a set amount of money, once it’s gone, you can’t spend any more in that category until the next month.

3. Transfer funds
Each time you get paid, transfer a set amount of money into each of your digital envelopes (or accounts). For example, if you want to spend $200 on groceries this month, transfer $200 into your “Groceries” account. And when that account is empty, you know it’s time to stop spending.

4. Track your spending
The beauty of the digital version is that you can easily track your spending in real-time. Whether you’re using a bank account with separate envelopes or an app like GoodBudget, these tools help you monitor your balance and alert you when you’re close to maxing out a category. It’s like having a personal finance assistant in your pocket!

Why go digital?

You might be wondering, "Why go digital when I could just carry cash?" Great question! Here are a few reasons why the digital envelope method works wonders:

• No cash, no problem: No need to worry about losing cash or running to the ATM. Everything’s managed from your phone or computer.
• Instant updates: Every purchase gets recorded automatically, so you can see exactly how much you’ve spent in each category.
• Convenience: You can set up automatic transfers, so you don’t have to manually move money each paycheck. It’s as close to set-it-and-forget-it as budgeting gets!
• More control: It’s a great way to keep yourself accountable. If you see that your “Dining Out” envelope is getting low, you’ll think twice before ordering that third coffee of the day.

Apps & tools to help you get started

Ready to make the switch to a digital envelope system? Here are a few apps and tools to help you get started:

• GoodBudget: A user-friendly app that lets you create virtual envelopes, track spending, and plan for future expenses. It’s like your own personal budget manager, available right on your phone.
• Simple: An app that lets you create “Goals” (digital envelopes) for saving and budgeting, with automatic transfers to keep you on track.

Why it works

The beauty of the digital envelope method is that it combines simplicity and control. It forces you to prioritize your spending, which helps you avoid impulse purchases and stay on track with your financial goals. Plus, it’s super satisfying to see those envelopes (or categories) filling up and to know that your money is working for you.

This method isn’t just for the tech-savvy. It’s a great tool for anyone who wants to take control of their money without overcomplicating things. Whether you’re paying off debt, saving for a vacation, or just trying to stick to your grocery budget, the digital envelope method can help you stay organized and focused.

Ready to try it out?

If you’re curious about trying the digital envelope method, I’d love to help you get started! You don’t have to do it alone. I’m always here to chat about budgeting strategies, answer your questions, or even help you set up your first digital envelopes. Schedule a free Financial Health Check Up, and let’s make your budget work for YOU.

Happy budgeting, friends!