How I’m Saving $350 a Month With the Envelope System

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The other day, I was at the bank, and teller politely asked why I was withdrawing several hundred dollars into cash. “Oh, I’m going all-cash now,” I responded, smiling. He seemed confused. “Oh! Well…uh, huh,” he said, slowly. “You know, there are a lot of advantages of using our online checking accounts – they’re a lot of simpler, you know?”

I thanked him, but I told him it wasn’t really about being simple anymore.

The Envelope System 

So I’ve been using this method called the envelope system recently. You may have already heard of it. I got the idea from taking Dave Ramsey’s Financial Peace University course (I completely recommend it), though I’m told the idea dates all the way back to my grandparents. I’ll have to ask them if that’s true, but that’s another story. I’m sure you’ll hear about it later.

Essentially, the idea of the envelope system is to store your cash into separate envelopes, each labeled with a household expense, things like “groceries,” “gas,” and “eating out.” The only rule is that you can only spend how much is in that envelope, until you get paid again. Neato, gang.

It’s a great visual aid of your money, especially for those of you who have a difficult time saving money and sticking to good spending habits. If you stick to it, you’ll find that you spend way less, and save way more.

I adopted the envelope system about 4 months ago, and it’s ballin’ sweet. I’m saving so much! My goal right now is to set aside $1000 dollars in an “emergency fund” (thanks again, Dave Ramsey), which I’ll actually finally reach next month. I’m stoked because I have, ahem, a bit of student loan debt, and now I feel I have some great resources and the mental motivation to actually start paying it off. Woo!

So, here’s a question for you:

Saving Money


Do you have trouble saving money?

Because I do. And your friends do. And your parents, probably. In fact, most members of the 20-something working class struggle to save money. You’re not alone. Shoot, we struggle not to spend $100 a week eating out! (I mean, if you live across the street from Trujillos at SDSU, you definitely know what I’m sayin’). Save money? What money?

The envelope system requires diligence and a good, hard look at your spending. Do you want to save money? Then you’re going to need to make some changes. Probably serious ones. But the reward is an extra $100, $200, and for some of us, $500 more a month! Is avoiding packing a lunch really worth it? Do you neeeeeed to get that acai bowl/muffin/mocha every morning? How about only twice a week instead?

Be warned: you might be in for a terrible shock if you start this crazy endeavor. When I first realized that I would only have $30 to spend on eating out a week, I had a mini panic attack at work thinking I was going to starve that day. I had to learn that there is such thing as buying bread, peanut butter, and jelly.

Think you want to start? Here’s how to get rolling:

Buy some envelopes: You’ll need about 10 or so. My list includes the following:

1. Rent
2. Utilities
3. Gas
4. Groceries
5. Eating Out
6. Miscellaneous
7. Clothes/Random/Entertainment
8. Tithe (most important! God gave you that money, you can’t go wrong giving back a little bit)
9. SAVINGS (any excess. You want excess.) This is your extra $350 a month.

Next: Identify problem areas. If you’re on more than about 15 minutes a day, you might want to take it easy on online shopping. Do you love Dominoes Pizza, like me? Well, no one loves Dominoes as much as me, but you might set a goal to 1 pizza per week, if not every other week.

If you don’t live on your own yet, that takes out a big chunk – no rent or utilities. However, everyone needs to manage their eating out, online shopping, and trips to the movies. Maybe you still need to devote a big chunk to clothes for now, just to get used to it; maybe you haven’t bought jeans since 11th grade and could care less. Whatever the case, the very fact that you’re reading this article puts you ahead of a vast majority of college students and grads in regards to smart money habits.

But here’s my best piece of advice: JUST TRY IT. 

There is literally no downside to the Envelope System – even if you still overspend, it’s not like you haven’t already been doing that. If you can’t stick with it, change your numbers. And if it works? Hooray! Moneymoneymoney. Save it for a rainy day.

Good luck!

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  1. Reblogged this on A Toolbox For Dad and commented:
    Thought this was a good blog about Personal Finance and what people call the “Envelope System”. We did this when we first got our first house. Its a really good way of saving money. Some people do another version of this but with checking accounts…

  2. Good post. We did the same thing when we bought our first house to help save after a big purchase. Some do a version of this but with checking accounts and have paychecks transfer certain dollar amounts to each account…

    • Thanks a lot! Yeah, as soon as I heard about this idea, I really wanted to try it. It’s hard to imagine saving money without it. I’m looking forward to seeing some success with big things like buying a house/marriage/kids, like you have!

  3. Good idea! I think I’ll do that for eating out money. That’s my weak spot.

    • Thanks, Adina! I appreciate the support. I know, augh – I spend so much eating out! If it was up to me, I’d have a huge acai bowl every morning, followed by Mexican food for lunch. It’s so hard not giving in! (Love your blog, btw!)

  4. Oh I’m having trouble in saving money and this is a good idea to start with. Thanks!

  5. I use this system and we have almost $2500 saved 🙂

  6. Back in the days before we all got paid electronically, you had to “cash” your check. You had to see the money go in even if it was still just a piece of paper with numbers on it. And before that, people were given cash; you felt it in your hand, you knew exactly how much that week or two of hard labour was worth. Today it is money in, money out, if you even remember it is payday, and in Europe that is only once a month (yuck). I like the idea of cash. I try to take out a certain amount every month and hide it in my special place. It is amazing how quickly you forget it is there. If it stayed in the electronic system, it would be gone. Great post.

    • Amanda, thanks for the feedback! I agree, times today are a lot different than in the past – it’s way too easy to spend your entire paycheck to moment you get it with one swipe of your card. Great idea about hiding a little savings, that’s one of my biggest problems – taking little and little from my savings! Thanks again for the great advice. Glad to have met you!

  7. rodneyaross says:

    This is really good advice! I’m horrible with saving so I might have to give this a try.

  8. What a great post and blog and great thing you’re doing. I wish I had this level of maturity when I was out of college! I’m 20ish years out and I wish I had done more of this (saving) when I was younger. It’s never too late, I know, but how helpful it would have been had I actually believed I would someday get older 😉

    (Thanks for stopping by my blog earlier today.)


  9. Alex Flores says:

    Hey Anthony! I’m a college student trying to start implementing the envelope system. Just wondering, how did you define the amounts for each envelope? Of course, rent and utilities can be known ahead of time, but I’m wondering about things like eating out, groceries, or gas(The ones you can control). Thank you!

    • Anthony Moore says:

      Hi Alex! Great question. I started out with fairly random numbers – a bit too small, I found out. You’ll get a feel for how much you typically spend and you can adjust accordingly. Make sense?


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