Finance:Envelope system
The envelope system, also known as the envelope budgeting method or cash stuffing, is a popular personal budgeting method for visualizing and maintaining a flexible budget.[1] The key idea is to prioritize cash income to meet separate categories of household expenses in physically separate envelopes.[2][3]
Usage
Typically, the person will write the name and average cost per month of a bill on the front of an envelope. Then, either once a month or when the person gets paid, they will put the amount for that bill in cash in the envelope. When the bill is due, the money is taken out to pay for that bill.[4][5]
This prevents the person from spending the money out of their pocket or bank account, because it is already allocated to the bill.[6]
This strategy can be adapted to multiple checking accounts, or by using budgeting software based on the person's preferences, in lieu of physical envelopes.[7]
Notable practitioners
- Jasmine Taylor[8]
- Dave Ramsey
See also
- Participatory budgeting
- Personal budget
- Programme budgeting
- Zero-based budgeting
References
- ↑ Thaler, Richard (August 1985). "Mental Accounting and Consumer Choice". Marketing Science 4 (3): 199–214. doi:10.1287/mksc.4.3.199. ISSN 0732-2399.
- ↑ "Envelope Budgeting System". MoneyFit. May 21, 2022. https://moneyfit.org/envelope-budgeting-system/.
- ↑ "Envelope Budgeting". Banktivity. https://www.iggsoftware.com/envelope-budgeting/.
- ↑ "How to Use the Envelope Budget System: A Guide for Older Adults". National council on ageing. August 26, 2022. https://www.ncoa.org/article/how-to-use-the-envelope-budget-system-a-guide-for-older-adults.
- ↑ Prelec, Drazen (February 2001). "Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay". Marketing Letters 12 (1): 5–12. doi:10.1023/A:1008196717017. ISSN 0923-0645.
- ↑ Heath, Chip (June 1996). "Mental Budgeting and Consumer Decisions". Journal of Consumer Research 23 (1): 40. doi:10.1086/209465. ISSN 0093-5301.
- ↑ "Cash Envelope System". 2025-09-03. https://pocketguard.com/blog/cash-envelope-system/.
- ↑ Shamo, Lauren; Ermey, Ryan (2023-03-25). "31-year-old used her $1,200 stimulus check to start a 'cash stuffing' business—it's on track to bring in $1 million this year". https://www.cnbc.com/2023/03/25/how-a-31-year-old-texan-made-850000-cash-stuffing-on-tiktok.html.
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