What it is
Envelope budgeting is a money management method where in which you’ll divide your cash into envelopes that represent different spending categories or money goals.
These envelopes typically contain money for rent or housing, utilities, food, transportation, and others. They can also include savings or money for short and long-term goals like planned trips, education, or big purchases.
This is traditionally done with physical money and actual envelopes but there are also apps that let you do it digitally. You may choose to follow this method every month or each time you get paid.
What it means for you
This budgeting method is relatively simple and can help you get your finances in order. You can track where your money is going by keeping an eye on how much money you have left in envelopes as you go.
It might be easier to stick to your budget when your money is in physical or virtual envelopes and you can’t spend beyond the amounts you’ve put in them.
You might also get better at saving money or working toward financial goals like investing if you’ll have dedicated envelopes for each goal.
