4 Great Alternatives to the Envelope Budgeting System

4 Great Alternatives to the Envelope Budgeting System
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Budgeting systems is one of those terms that seems to strike fear in even the strongest of individuals. Over the years, households, or at least the person in charge of the household finances, have come up with numerous ways to create a budget they can actually do, and one of these is using envelopes to keep track of what you spend.

How It Works

In case you are not familiar with the envelope system, it is similar to how it sounds. You assign one envelope for each expense you have. You will have envelopes marked for groceries, one for the electric bill, one for entertainment, one for gas, and one for any other expenses you may have each month. According to your budget, you slide the amount of money you have to spend into each envelope. In order to stick to your budget, you can only spend what it is in the envelope, or less, for that particular area of the budget.

Fortunately, here you will find four alternatives to envelope budgeting, including online offerings, the old jar system, creating your own personal budget spreadsheets and setting up separate savings accounts.

1. Online Programs

As technology continued to become more and more advanced, one of the primary alternatives to envelope budgeting systems includes various online programs. One such program is Mint.com (link in reference section), which allows you to set and manage your budget. The program even allows you to upload bank and credit card statements into the program to help allocate your spending and ability to stick to your budget accordingly. This online budgeting program also allows you to run and even print reports, charts and graphs to help you evaluate your spending habits and savings.

2. Jar System

The jar system is another alternative to the envelope option. The jar and envelope systems may be two of the best ways to drive the point of money, and spending money to teach your children lessons because each is a very tangible system. You can return to the old jar system, which is similar to but slightly different from the envelope system. With the jar system, you label a glass jar for each expense and drop the budgeted amount of money into the jar. Again, you can only spend up to the amount in the jar on that particular expense.

3. Spreadsheet

Another budgeting alternative is to set up and use a spreadsheet program, using a program such as Microsoft Excel. You can set up columns and rows in the spreadsheet to represent the income and expenses you have each month. For example, one column may represent your budgeted amount for the item in that row and the next column may be what you actually spent. The third column can then be the difference between the amount you allocated and the amount you actually spent.

4. Savings Accounts

Another technologically advanced budgeting system is setting up an individual savings account for each of your goals. Some banks and financial institutions even allow you to give each of the individual accounts nicknames. This allows you to set up different savings accounts to allocate funds for household bills, a vacation fund, college fund, etc. Some savings institutions even allow you to set goals and help you keep track of how much of your goal is actually achieved.

For example, say one of your savings accounts is to save for the family vacation and you set the goal for $2,000. As you deposit money into the vacation savings account, the account will tell you the amount of money you have in the account, but it will also tell you the percentage of the goal you have achieved. For example, when you save $1,000, it will tell you that you have achieved 50 percent of your savings goal.

Budgeting, setting spending limits and managing your money is never a favorite tasks for individuals, business owners or households. Finding a budgeting system and sticking to it, however, can help you and your family achieve your financial goals, stick to your budget and even teach your children money lessons and the value of money.

While the envelope budgeting system does still work for some people, you may be looking for alternatives to this system. You may try one or more of these alternatives before you find the one that works best for you. You may even use a couple of different options for different aspects of your budget. There is not a one-size-fits-all formula for everyone, so by trial and error you can determine which system helps you set your budgeting goals and then stick to them.


Mint.com website

Wang, Jim - Bargaineering (2008) - “Brief Look at Five Budgeting Systems” retrieved at https://www.bargaineering.com/articles/brief-look-at-five-budgeting-systems.html.

Smarty Pig - https://www.smartypig.com/

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Piggy Bank - https://morguefile.com/archive/display/3063/mconnors