How to Manage Personal Checking Using an Envelope System

Use real envelopes or virtual ones in an online budget management program.

Use real envelopes or virtual ones in an online budget management program.

Whether you use a debit card or a credit card, paying with plastic makes it easy to spend more than what your budget allows. But you don't have to ride the endless wheel of debt. Instead, you can take control and manage the money in your personal checking account with an envelope system. Financial guru and author Dave Ramsey advocates this system as an excellent way to manage and control your spending.

Create a budget, if you haven't already, to see where your money is going every month. Include all your expenses.

Make a list of expenses that either automatically draft from your checking account or that you prefer to pay by check. For example, you may prefer to pay your mortgage by check each month or you might have your electricity bill set up for automatic payment.

Write down categories of expenses that you can pay in cash and the amounts you want to allot to each category. Examples of expenses you can pay in cash include groceries, entertainment, clothing, car repair, toiletries and meals out.

Count how many categories you have for cash expenses. Gather the correct number of envelopes. Label each envelope with a category. Write the dollar amount you wish to allot to each category on the front or flap of the envelope.

Withdraw the correct amount of cash from your checking account when you get paid. Plan the amounts based on your pay periods and amount of money you need to allot for expenses such as your mortgage, electricity bill and insurance. For example, some categories -- such as groceries and gas -- may need contributions more than once per month, due to other bills that need to be paid.

Distribute the correct amount of cash into each envelope. Spend the money as you see fit. Once the money is gone, do not withdraw more until the next payday.

Reevaluate your system each month and make adjustments to better fit your lifestyle. You may find that you want to add or delete a category or allot more or less money to certain expenses.


  • Consider labeling an envelope "Emergency Funds" to cover unexpected medical expenses or car repairs that exceed the amount you've budgeted. Use these funds only in situations that are truly emergencies. Personal finance expert Dave Ramsey suggests shifting funds from one of your nonessential categories, such as entertainment or restaurants, if the amount in your emergency envelope isn't enough to cover the unexpected expense.


  • Don't routinely rob one envelope to cover extra expenses in another category or the system won't work properly.
  • Don't use your debit or credit card in times of weakness. It can cause you to overspend.

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About the Author

Based in Texas, Cynthia Measom has been writing various parenting, business and finance and education articles since 2011. Her articles have appeared on websites such as The Bump and Motley Fool. Measom received a Bachelor of Arts in English from the University of Texas at Austin.

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