Reader,

Envelope budgeting is not a new idea. Before digital banking, people would cash their paychecks and divide the money into actual envelopes - groceries, rent, entertainment, etc. Once an envelope was empty, that was it. You were done spending in that category (unless you chose to take money from another envelope to refill it.)

It was simple, tangible, and visual. It brought people in touch with the finitude of their money, which most of us still deal with, even if we choose not to look at our dollars that way.

And it worked (still works!) because you could see the money and feel the limits.

Eventually that system got widely replaced by credit cards, auto-pay, and multiple bank accounts. And with that shift, something changed. The tradeoff for automaticity, and what feels like ease, is that we stop looking as closely. We lose track of what each one of our dollars is actually doing.

And I say “perceived ease” on purpose. Because the envelope system, once it’s up and running, is very simple and very easy. I'd argue, in fact, that it's the simplest form of cash flow management.

It might not feel that way at first, especially if you’re going from very little looking to very close looking. It takes attention and time you’re probably not used to giving your money. But on the other side of that effort, you get all the ease you have now plus the financial confidence you may not be currently experiencing.

The principles behind envelope budgeting are still solid: decide what your money is for. Spend on purpose.

That’s what I teach!

Picture using real envelopes and actual dollars. You sit down, look at your money, make some decisions, and fill your envelopes: gas, Christmas, Netflix, groceries, eating out, future travel, and so on.

You decide what matters before you spend, using dollars you already have. So when you head out later, or order DoorDash, you already know there’s money in the envelope for it. You don’t have to feel guilty or second guess, because you already made the decision.

And if the envelope’s empty? First of all, that will no longer be a surprise because you never lost track of it. In that moment, you either don't spend in that category or move dollars over from another one.

You get to decide. You’re up close with the trade-offs you’re making every time you spend. Even a single dollar becomes more valuable.

Yeah, there are limits. But you make them. They’re not arbitrary or imposed by some guilt-tripping budget guru or screaming money monitor. You are always in control of your envelopes. And because of that, you’re in control of what you spend and where. It's no one else's business how you divide your dollars up and spend them.

It’s fun to imagine, right? Stacks of envelopes, stuffed with dollars, filled by you and ready to be spent.

You start seeing money differently. You can switch things around, try again tomorrow. It’s creative, and calming, and it’s one of the few systems where the structure actually helps you breathe easier.

A digital version of this system is what I help people set up. Email me back when you're ready.

Allegra