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How To Start Saving Money Using The Envelope System

Posted by Jen King on 8/28/16 12:00 AM

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Looking for ways to help save money? One of the most popular experts on helping people reach their financials goals says all you need are some envelopes.


Dave Ramsey introduced the "envelope system" in his incredibly popular book Total Money Makeover (which I definitely recommend reading).  Basically the idea is that overspending is what keeps you from saving, so this helps you make a budget that you can actually keep. Handy for all of the things you want to be paying for, right? 

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If you're having trouble just saving on your own, this is the system for you. There's something about this simple way to save helped me make sure I was keeping all of my spending goals. 

Steps For The Envelope System

  • Decide on your budget
  • Create your envelopes
  • Stick to it!

Decide On Your Budget

A lot of people create their budget depending on what they spend. They add up all of their bills (rent, groceries, gas, credit card, etc) and then whatever they have left at the end of the month is what they save.

Example: Let's say your income is $700 per month. $250 goes to rent, $75 on groceries,  $100 is your car insurance , you spend $100 on gas (all that commuting adds up),  $100 is your fun spending money, then a $50 cell phone bill ... all of that means $25 that I can put to savings.  All these amounts will form the categories for your envelopes. 

If you're not sure how much money goes where, you can use one of these easy budgeting apps to help categorize where your money is going. You may be surprised to realize how much you actually spend on gas or groceries each month. 

Create Your Envelopes

Once you know how much you spend on each "category" of your life, ditch your credit and debit cards and start using cash only!  

When you're swiping your debit card, it's hard to calculate how much you're actually spending (or overspending) which doesn't help your savings goal. That's why we're switching to cash — it's a much more, in-person transaction that helps you visualize how much you're spending. 

So, for step 2, withdraw all of the cash from your checking account when you get your paycheck and then put it into designated envelopes. You'll pay for everthing from these envelopes until you get your next paycheck. This will make you VERY aware when you're running low on money and need to take it easy. No overspending when you stick to the envelopes.

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Stick to it!

If $30 is all you have in your "eating out" budget, you'll need to wait until next paycheck to go out when you run low. Budgeting is no fun, but it'll end up paying off in the end, I promise. This strategy can help you travel on a budget, save up for a big purchase (maybe like a semester living in Europe or a new car?) and just help you manage your funds a little better.

If you have any money leftover at the end of the month, then awesome! Dave Ramsey says go ahead and celebrate by treating yourself with that leftover cash ... or you can put that money straight into your savings and be a little closer to your dream trip. 

A Few More Tips — 

You can make your money go further by racking up student discounts (perfect for any college students out there!) or by spending less money at the grocery store. 

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Saving up for a semester abroad? 

We have got lots of money saving tips for you! When you volunteer with ILP, our program fee includes tons of things like airfare, housing, meals and your visa, and a few other things ... plus we are here to help you afford your dream semester. 

How To Afford It


Topics: Get Ready For Your ILP Trip, Saving Money + Fundraising

Hey friends!

We are ILP, a Utah-based non-profit org that has service abroad opportunities for college-age volunteers. We love travel so we're sharing all our tips for making the most of your time living abroad + seeing the world, and how to do it all on the tiniest budget.

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