Envelope System Video Tutorial (Step By Step Guide To Using The Envelope System To Manage Your Cash)

I use the Envelope System to manage my cash. The idea behind the envelope system is pretty simple. By distributing you cash into manageable budget categories, you can control spending, manage receipts, and fine-tune your budget. I thought that it would be interesting to create a video tutorial, explaining the basics of my envelope system. (Please note: I use actually envelopes to manage my cash, but you could use any method for dividing your cash into manageable amounts.) You will have to click the arrow to start the video… and you might have to hit the small volume bar at the bottom to get the audio to play. I did not set this video to “auto-play” because I hate going to sites that set their videos to “auto-play”.

Leave a comment and let me know what you think about the video.

(My Dad watched it and said… “Looks like the opening to Napoleon Dynamite”. )

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108 Responses to Envelope System Video Tutorial (Step By Step Guide To Using The Envelope System To Manage Your Cash)

  1. Jilse says:

    I enjoyed your tutorial. I have heard of the envelope system and have actually started using this system myself, this month in fact. Your tutorial explained some of the finer points that I didn’t think of, such as, what to do with the leftover money at the end of the week and/or month.

    I also started putting our extra change into a small change jar, to be used toward a debt later, and I was pleased to see that this is what you suggest to do as well. The tutorial was easy to undertsand, well thought out, and nicely done. Thank you for the time and effort you put into it.

  2. NCN says:

    Jilse… Thanks! Check back in at the end of the month and let me know how it goes…

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  4. Big Honkin says:

    Great vid. Simple yet hard to do until someone actually shows me. However, I now want to do my version of the envelope system. :)

  5. ~Dawn says:

    Excellant video!
    I go by a two week budget

    I would suggest that you go to a different ATM as they are giving play money!

  6. I love the way you’ve done the video. Too much movement/action makes me very dizzy, so it was nice to have the stills. (P.S… that piggy bank is adorable :))

    I do sort of the same principle, but online and in excel sheets because with my travelling so much, I have a TON of company expenses ranging up to a couple thousand per week (converting from USD > CAD, if I cross the border), and I almost have to do a double budget every month – one for me, one for the company, and make sure I get my cash back for what I spent from the company.

    Thanks for the video!!

  7. femmme says:

    I loved this as I have many friends that use this system. My only question is , what if you are out and see cheap gas but you don’t have the gas envelope? Or, what if you want to run to the market on your way home. Should you stash the envelopes in your car? That seems highly risky…
    the video was great, very thorough

  8. NCN says:

    Femmme: If you are worried about the amounts in your envelopes, simply carry enough for a day or week… or, instead of envelopes, use paper clips, and keep the separated piles in your wallet…
    (Who actually keeps his cash in the arm rest between the front seats of his car…)

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  10. Tracy says:

    Love it! Just started getting cash out for groceries in July, went back to checks for Aug, but will go back to cash in Sept- instead of keeping it in an envelope, I keep it where we keep change for milk money, in a tin above the oven. This way we have change for milk for the kids, I have four in school. I file receipts about twice a month. Will have to start a gas envelope.

  11. Christine says:

    Good tutorial! :)

    I use the envelope system, too. I also keep a running total of each “account” in a separate notebook as well. It works for me.

    I recently wrote a blog about my money management system, and another blogger actually mocked me! Of course, he also linked to my blog and gave me lots of extra views, so I can’t complain too much. lol

  12. Chris says:

    Great video but you could probably shorten it up a bit.

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  14. susan says:

    Very useful tutorial.
    I had heard about this and think I will give it a try.

    Thanks for taking the time to prpeare this for us.

  15. Jessica says:

    Thanks for doing this video. I have been using the enveloppe system for a little while only I tend to leave my money at home and merge the cash that I carry with me (mainly my groceries and spending money). I really liked the idea of having the receipts into the individual enveloppes and I think I’m going to start having an enveloppe for my spending money now.

    PS I use bank enveloppes because I find that when I do carry them in my purse they get all mangled. Also the only regular enveloppes I keep at home are prestamped enveloppes so I get the bank ones for free.

  16. SAHMmy Says says:

    This video meets my requirement for personal finance instruction: talk to me like I’m three! I use the envelope system, but meet with strong opposition when I suggest that others use it. It’s not that hard, people! Your video does a great job of putting it simply.

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  18. jojo says:

    Great video! Nice and simple. I love the idea of putting savings from various categories over the month/pay period towards debt or investments.

    I like to use my debit card instead of cash, so I use a computer program called Budget, which also uses the envelope method, to manage my money. It is fantastic and has allowed me to realize money goals and have fun doing it. http://www.snowmintcs.com/

  19. Lisa says:

    Thank you…I have been trying to figure out just how to make my own envelope system, since our budget does not allow for this. I am a visual learner and this helped a lot!

  20. Mary says:

    This is a great presenation. I needed to “see” the envelope system to really understand it fully – like what can I do with any money left in the envelopes at months end etc. Although I have been mangaing our funds on a simple spreadsheet for 18 months – September was the first time I ever tried actual physical envelopes instead of ‘virtual envelopes’. It worked very well – what a great way to keep the budget in front of me all the time! We even had money left in a few envelopes. SO I got all set up to start again in October. My kids are catching on to the system – They often ask “what category would this come out of?” or “is this from the dining out or food envelope?” I hope they are anchoring financial concepts now so they don’t have to learn them the hard way later.

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  22. Debz says:

    Great video, Im going to try this system, I seem to have got all muddled with cash and cards and have got in to quite a bit of debt :( fingers crossed this will help me out xx

  23. Sandy says:

    I like your accent! This is what our parents’ parents used to do before credit cards came along – it worked for them, so can work for us. I finally paid off my credit card debt and the feeling is just wonderful, so I’m willing now to make any effort to not go there again. I’ve learned that “bigger, better, fancier, shinier” is Not worth it if it (1) causes you use any of your emergency fund to pay for it, and or (2) if you have to put it on a credit card.

  24. Lisa says:

    I think this video is very understandable and useful. You did a good job explaining your purpose. I need a money saving tip. Thanks!

  25. Dina says:

    Thanks for explaining, I’m going to try it for two months and see what happens.

  26. Lisa says:

    Enjoyed your video. Great Job! I have used the envelope system in the past with success. So why did I stop?? I guess I thought I could manage my money better without the envelopes. NOt so much.

    Am going back to the envelopes with this paycheck. I need Accountability!!

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  28. Nicki says:

    I just stumbled on this video and was really happy to see it! We have been using the envelope system for about five years now but I stopped talking about it since everyone would look at me like I had lost my mind – I was becoming a secret envelope user. I now feel free to out myself again. Thanks for the validation!

  29. Great explanation of how to use envelopes in budgeting, thanks for putting it up. I use cash exclusively except for the rare hotel and car rental expenses. Cash with the envelopes makes it easy to stick to a budget and almost impossible to fail – I highly recommend it. Personally I prefer a software version of the envelope system, but both work. Thanks!

  30. Nancy says:

    Thank you for your tutorial and thank you for putting it out there for free! Those of us in serious debt do not need to pay Dave Ramsey more money we don’t have. We needed help. We will be trying this.

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  32. Renee says:

    Thank you so much for the video. I am going to start the program this Friday ( my first paycheck of the year) . I have been struggling to get better control of my money . Thanks again .I’m really glad I found you blog. God Bless!

  33. NCN says:

    Renee… Thank you for the comment. It’s nice to hear that some folks really like what I’m doing. Hope you have much success,

  34. Walt says:

    Great video. We’ve been using the envelope system for a couple months now. I like the idea with the change and just putting it into a piggy bank and all. Will use that going forward.

  35. Ryuko says:

    Neat video. It’s nice to see the concept in action :D

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  37. Patrick says:

    Great video. Thanks.

    Though I couldn’t see the flash(?) video, had to view the quicktime video (firefox on a Mac).

  38. Christina says:

    Hi, Just wanted to let you know that your visual aid tutorial for the envelope system was great to see in action. I am emailing the link to your website to my hubby right now. We are currently working on getting out of debt and are sick and tired of being sick and tired. I don’t have financial peace university yet, but would like to get it someday through Dave Ramsey. I am searching online for as much helpful hints as I can get. There is a light at the end of the money, I mean tunnel. ;)

  39. Karen says:

    Great tutorial and graphics. It’s simple and easy to understand. Thank you for that!

  40. sdf says:

    i really liked your accent. i used a similar system and i encourage anyone else to do so if you’re interested at all in controlling your spending. seeing it on video really gets the message across.

    even if you don’t want to get into it straitaway, if you’re serious, just try logging every penny you spend for a few weeks or even months and then you can be really honest with yourself about what you want. you will find money as if by magic – i guarantee it.

  41. Jaclyn says:

    I love the envelope method and your video. I used to do this back when I was a teenager 10+ years ago. Easy and fun then when I didn’t have a car to tempt me to the mall or household bills to pay. I’m adopting the envelope system again as we have purchased a home and need to tighten our belt and keep better track of spending. :)

  42. Trailblazer says:

    Thanks – great video. Question though. At the end of the month, if cash is remaining you mentioned one option of putting it towards debt. This is my preferred option. But almost all debt payments are done online or using a check. Are you actually going to the bank and depositing the extra money (say $60) and then paying one of you debts with this? I don’t have a brick and mortar bank so looking for alternatives on how to pay my debt with remaining cash on hand.

    Thanks again!

  43. NCN says:

    @Trailblazer – Simply keep the 60 dollars for the next month, and when your paycheck is deposited, take 60 dollars from it and pay down your debt. Or, and this would cost about 1.00 or so, you could buy a money order and send it.

  44. Anna K. says:

    Very helpful for us visual learners out there!

    Thank you so much for doing this.

  45. Katie says:

    I’ve been thinking about switching to the envelope system. This video was great-step by step and easy to follow. Thanks!

  46. sdf says:


  47. Fiona says:

    We’ve been on the envelope system for a month now. We are having good success so far. It is helpful for my husband to look and see what we have for each category, rather than to see X dollars and then want to spend it all in one area. We use a coupon folder to separate the money and index cards in each section to keep track of the initial “deposit” and expenses. Thank you for a good, easy video. OH, and our “surplus” goes into an account for my husband. He can save or spend as he wishes.

  48. Brooke says:

    Thanks for making this video! I am going to try this out next month and see how it works. I feel like a lot of my money goes into the “black hole” of electronic transfers, payments, credit and debit cards, where I don’t have to worry about it because it just seems like “numbers” instead of actual cash.

  49. Sooz says:

    This was really helpful. I never actually “saw” how this worked before. I’m going to try it out strating tomorrow, May 1st!

  50. michelle says:

    thank you so much for sharing. i have been attempting to do the envelope system for about 4 months and it’s been tough actually managing the money. it was quite helpful to see the visuals.

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  53. Kelli says:

    An ING Direct account can help you do the envelope system online, and it’s easy. (I don’t work for ING!) If you’ve got a little cash, say $300-$500, keep it in your main ING checking account as a base. You can have as many savings accounts (envelopes) under the umbrealla of your checking account, name them what you want, and they don’t cost anything. In fact, each account will earn interest! So when you use the check card from your main account to buy gas or groceries, when you get home (or you can do it from your cell phone), just transfer the funds from your grocery or gas “envelope” account to the main account so you keep your base amount the same. If you know you’re going to make a larger purchase, you can of course transfer your money before you go. This is a little safer than using cash, you get interest, and have some money readily available if you decide to stop for a few groceries or fill up when you see cheap(er) gas.
    Now if you still want to use the envelope system (and this system really does help you budget) there are plastic “enevelopes” with dividers (you can get them in the office supply section of Target, Wal Mart, or in places like Stapels). I found they work better than paper- just more durable and all in one place. Before ING, I kept one hidden at home with all the monthly money in it. I had a smaller one in my purse and would keep a certain amount of money from the larger envelope in this one. All the money was still divided. So in the one in my purse, I would have about $100 for groceries, $100 for gas, $50 for dry cleaning, etc. If you don’t want to carry one of these plastic envelopes (they are kind of like a coupon keeper), you can also use colored paperclips to sort your money in your wallet.
    This system really works, because when you use cash, it’s either there or it’s not. And you learn how to make ends meet at the end of the month. At first, I would just do two weeks at a time. When I got paid, I would pay all my bils that were due for the next two weeks, then put the rest into the categories as needed. Towards the end of the two weeks, if I needed more money for gas, I had to take it from the grocery money, and really budget my food spending. I used more of what was in my cabinets and freezer and actually put stuff back at the grocery store that I really didn’t need. You’ll find the categories that work well for your life. I have one for my beauty spending because I know I need a haircut and color every two months or so. What’s good about the ING method is if you put a certain amount in from each paycheck for certain larger bills like insurance, which may not be monthly bills, that money will just be sitting there for a while and it will earn some interest. This is great for your savings and vacation “envelopes”.
    Have fun!

  54. XK says:

    Thank you. I’m terrible with money and this seems like a very simple system to use. I appreciate you taking the time to make the video.

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  56. Chuck says:

    I always wanted to keep budget to get the most out of my money. Being single makes it not a something easy for me to get the habit into. However I like the over simplified approach to it.


  57. crimsonstars says:

    I think this was an excellent tutorial! I linked to it on my blog because it’s a great way to show people how to use it. I ended up getting the Dave Ramsey envelope system, otherwise I’d still be trying to find the perfect wallet to fit the envelopes in! With my change, I put it in a jar and at the end of every month I wrap them and put them in my son’s savings account for his college.

  58. Vicky says:

    I too have been using this method for a few years now and I can honestly tell you that since I’ve started this, I’ve had the best sleep of my life! Budgeting is the key people! This simplifies your life in everyway.. Great video to help you understand and get that ball rolling towards financial freedom…Just give it a chance!!

  59. Annie says:

    Thanks for the tutorial! My parents taught be this system. I’m thinking about going back to it soon. Easy way to track expenses for us non-accountant types.

  60. elizabeth says:

    I see comments going back almost a year. Good, clear, concise video. Thanks!

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  64. Colleen says:

    Thanks for the video!

  65. brewer says:

    love the video and we are in agreement %100!. my wife and i use the cash only system too. we have saved money seeing the money spent – rather than the ease of using a credit card. she got tired of using the plain envelopes though. a friend told her about a website that makes inexpensive “cash only” envelopes. she got a set for about $10 – 15.00 and loves them. She says they look better than pulling out the white envelopes out of her purse. whatever it takes to keep the cash only system working – i am all for it.

  66. Ty says:

    Thanks for the video! Just started my journey to the envelope system and it was great to actually see it done. And I love the idea of saving the change! Hopefully this will be the answer for me :0) Thanks again!

  67. reef says:

    really enjoyed the presentation. I cant wait to try it starting this week. will keep you posted!

  68. Kim says:

    Excellent video! I work from home and was having a discussion on a work at home forum (www.workplacelikehome.com) about starting to use the envelope system. Some on there hadn’t heard of it and I so I did a quick search and found your page and linked it there. I just came back to watch your video and I am very impressed! I wasn’t sure what to do with the change, having it rolling around in an envelope didn’t seem like too great of an idea! So I love the “put it in your piggy bank” idea. I suppose then that gets cashed in when it is so much and put towards savings? I also had a thought, that the excess $$, even the change, from the food budget could be saved to go towards an expensive meal, like Thanksgiving or Christmas dinner. Those always tend to blow the budget out of the water. I am linking your blog on my blog which is for work at home jobs. Thanks for the awesome post!! I will have to spend some time reading your other posts as well.

  69. Great tutorial. It’s nice to have a visual explanation for those of us who are visual and kinesthetic learners.

    p.s. you sound slightly like dave ramsey with your southern drawal. lol. :)

  70. Lemizeraq says:

    Great video! Your site is great with lots of things to share about saving money.

  71. melanie says:

    great video! it is nice to see the system in action.

  72. Dave says:

    Bogus. Everybody knows simple, common-sense things like this don’t REALLY work. What we need is a POWERFUL SYSTEM of INSIDER SECRETS for only $19.98. Because everyone knows you get what you pay for.

    And yes, this is sarcasm.

    Nice job. This is stuff we all should have learned when we were chirrens.

  73. tb says:

    Great video!

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  76. monica says:

    Thank you so much for the work put in this presentation. I heard of the envelope system, but I’m visual and needed to see it done.I will start right away. I’m sick and tired of overdrafts for a couple of dollars($1.89+$35.00) .

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  78. Luke says:

    Fantastic video! I think this is one of the best explanations I have heard.

    I personally use the envelope method for budgeting my family’s finances, but I don’t like carrying around all that cash. So I developed an online envelope-based budget tracking system called NeoBudget (www.neobudget.com) that uses virtual envelopes. It has the same psychological benefit as cash envelopes, but I can use my debit card instead.

  79. Kelly says:

    Very cool. Very convenient. I will do this my next check. I like the whole paying off debt with any left over money. Very cool. I may put any left over money into my vacation or Christmas envelope…

  80. NITRO says:

    works for me great and saves me money . lol the fake cash but hey keep me on track of my cash

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  82. don says:

    Thanks for the suggestions, we are going to tweek it alittle and give it a try.

  83. patty ann says:

    great tutorial!!! everyone should try the cash only budget system – my husband and i have been on the dave ramsey system for the past 8 months – we are hooked. we dare you to try it just for 1 month. you will save money! and for assistance in keeping your money organized and making the cash only system work smoothly – go to http://www.crunchycute.com. they have a variety of tools for starting the cash only system – plus lots of free giveaways!
    good luck to everyone – patty ann

  84. Barb says:

    Marvelous video! I will definately take the suggestions from the video to heart! Thank you!!!

  85. Chris says:

    While I do not use this system there is one huge advantage that would persuade me to use a modified version. You know where your receipt is if you need to return something. I am horrible about keeping my receipts!

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  87. steve says:

    Wow, that was a great tutorial. Really, budgeting is just as simple as you described it. All you have to do is what you said and you’re golden.

    As to the danger of losing a month’s worth of cash while carrying the envelopes around, well, it could happen but even if it didI think I’d still be ahead as it would cost me *much* less than I’ve lost through overspending whennot using the envelope system.

    It’s been back to the envelopes for me now after finally deciding that it just is more concrete and practical than any other method. There’s no complexity with which to confuse or delude yourself in the envelope system. Either the dollar bills are there or they aren’t. And you can see how many are left each time you go in to make a purchase so it’s a natural spending moderator.

    One thing I have added is I do have a credit card that I use to buy gas for my car. How I do this and keep it in the envelope system is I have a “gas” envelope and a “Chase Credit Card” envelope. The Chase Credit Card envelope starts the month empty, and what I do is take the cash from the gas envelope and transfer it to the Chase Credit Card envelope when I make the gas purchase. At the end of the month I use that cash in the Chase Credit Card envelope to pay off my credit card.

    That way I get the convenience of not having to wait in line for gas, but still have the concrete limit that I only have what’s in the envelopes to spend.

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  89. Deb says:

    I enjoyed watching your video! Next month my husband and I willll begin following a budget because even though we have a great income and no credit card debt we could be saving a lot more money than we already are.

  90. Creative Triplet Mom says:

    Thank you so much for sharing that tutorial. I just finished reading the Dave Ramsey’s book and want to so get control over my spending. I especially like the idea of writing on the envelope and loose change in a piggy bank. I am forever making my pocketbook heavy with that loose change.

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  92. elaine says:

    While I’m paying my bill, my supermarket sometimes gives me coupons to use the next time I’m in the store. If I can use one or more of the coupons (wisely), I keep them in the Money envelope until I’m ready to redeem them. Two uses for one Money envelope! (So I can see what’s inside, I use recycled window envelopes which I’ve received in the mail and turned inside out and reglued.)

  93. Ruby says:

    Thank you very much!
    Loved the video!
    Straight forward and to the point.
    Good job!
    Much appreciated,

  94. rick says:

    Great .. Simple and very easy to put in practice

  95. anne says:

    Thanks. Seeing and hearing your calm voice helps. I like the details about what to do after with the leftover. The only thing not mentioned is not to get more money if you run out. Also may be easier to writ ethe date/item/amount/balance in a column so you don’t have to scribble all over the envelope if you shop often. Overall I really appreciate this video and its simplicity. It is very supportive and I feel inspired to try the system out…!

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  97. Cynthia says:

    I really enjoyed this tutorial – thank you for taking the time to make this tutorial. I especially appreciated how simple it is and the imagery of the monopoly money! Thank you again! Can you make one for budgeting using this same visual style of tutorial?

  98. Jaygurl says:

    Just watched your video and loved it. Heard about system but I am a visual person and seeing it really motivates me to try it. I will start next month. Thanks!

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