What is a good alternative to the envelope method?

Budgeting has traditionally been seen as a constrictive, boring and ultimately unenjoyable fact of life. The ways in which we are taught to manage personal finances are often spoken of once and then left untouched.

As a result, many people tend to stick with one way to budget and rarely question if there is a better alternative to effectively organize their finances.

What is the envelope method?

The envelope method is one of the ways in which many people have created and stuck to a budget for the past 100+ years. The envelope method is a popular budgeting technique where cash is divided into different envelopes for various expenses.

Following this method one would cash the entire amount in which they can spend for the next month and then divide it into separate envelopes for different things. One envelope for rent, one for groceries, one for recurring expenses etc.

Although this method has been successful for many people over the years, in the age of technology and contactless payments it has become impractical and outdated. Fortunately, there are other budgeting alternatives that can help you stay on track with your expenses. 

Banking Pots

Banking pots are similar to envelopes, but instead of using cash, you use your bank account. Many banks now offer a feature where you can create virtual pots or sub-accounts within your main account.

You can allocate money for specific expenses, such as rent, bills, groceries, etc into each pot. This helps you keep track of your expenses and ensures that you have enough money to cover them.

Banking pots also make it easy to transfer money between different accounts, so you can move money from your savings account to your everyday account when needed. On top of that if you have a bank that offers daily interest you can even make a small amount of money by keeping your money in pots. 


Excel is another hugely popular tool for budgeting because it allows you to create custom spreadsheets to track your expenses and income. You can create different sheets for different expenses, such as rent, bills, and groceries, and input your expenses and income for each category.

Excel can be a great way to visualize your income vs spending as it allows you to create charts and graphs to depict your personal finances in a different way. Although Excel is a very useful tool it requires a great deal of manual input and needs it constantly updates in order to be accurate. 

Budgeting Apps

Budgeting apps are another popular alternative to the envelope method and one of the most effective ways to budget and manage your personal finance. These apps allow you to track your expenses and income, create budgets, and set financial goals.

They also offer alerts and notifications to remind you of upcoming bills or warn you when you are close to exceeding your budget. Unlike Excel or the envelope method budgeting apps can link to your bank accounts, credit cards, and other financial accounts to automatically track your expenses and income.

Apps like Emma even allow you to make and monitor Investments, keep track of recurring expenses, and transfer money directly to payees all in one place.

If the envelope method is no longer working for you or you are simply looking to streamline your finances, there are several alternatives to consider. Banking pots, excel and budgeting apps are all great options for tracking your expenses and income.

Each method has its own advantages and disadvantages, so it’s important to find the one that works best for you. By ditching the envelope method and automating your budgeting you can stay on top of your finances and achieve your financial goals.

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