The envelope method: a budget per category that limits overspending
AmanaFi team · Updated · 1 min read
The envelope method means setting a sum for each category of the month's spending and not exceeding it. When the envelope is empty, that category stops until the next period.
The principle
Originally, people put cash in real envelopes. Today you track each category's balance in a notebook or an app, which amounts to the same thing without handling cash.
Which categories to choose
Keep envelopes for spending where you can drift, not for fixed costs.
- Groceries and food.
- Coffee, restaurants and going out.
- Fuel or transport.
- Leisure and clothes.
When an envelope empties too soon
Two options: take from another envelope and note it, or accept cutting back until the period ends. If it happens every month, the sum you set is unrealistic and should be raised while lowering elsewhere.
Frequently asked
Do I need cash for each envelope?
No. Tracking each category's balance is enough; cash can help some people slow their purchases, but it is not required.
Put it into practice with AmanaFi
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