vs. The Envelope System: Answer these 7 questions to know which budget method is right for you

In today’s hyper-connected age, seekers of budgetary advice have an embarrassment of riches at their disposal. Top Down strategies, Zero-Based strategies, the 50/30/20 rule… the list goes on and on.

Feeling overwhelmed yet? We’re here to help. 

At a high level, budget methods today can be defined as either “offline” or “online.” Perhaps the most well known “offline” method is Dave Ramsey’s Envelope System.  After diving up your monthly income, you literally divide up your cash into the titular envelopes for spending. In Dave’s words:

“Fill ‘er Up.

After you’ve categorized your cash expenses, fill each envelope with the money allotted for it in your budget. For example, if you allow $100 for clothing, put $100 in cash in your clothing envelope for the month.

When it’s gone, it’s gone.

Once you’ve spent all the money in a given envelope, you’re done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can’t spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdraw more money!”

At the other end of the spectrum, we have “online” systems to budget and track your finances, the most popular of which is  The site, and its accompanying mobile app, allows users to aggregate all of their financial accounts into one place. That’s right- your checking, saving, IRA, 401K, mutual funds… the whole shebang all in one place. vs envelope method budget

Naturally, a budgetary method only works if you actually put it into practice. So which method are you most likely to maintain? Answer the questions below to find out.

Question #1: Are you an impulse buyer?

All too often credit or debit cards can feel like “Monopoly Money” and you don’t realize that you’ve overspent until it’s too late.  If you’ve been using credit to snatch up Park Place with money you don’t really have, you aren’t alone. The folks at NerdWallet did an analysis of Federal credit data and the average outstanding balance is pretty hefty.

Based on an analysis of Federal Reserve statistics and other government data, the average household owes $7,123 on their cards; looking only at indebted households, the average outstanding balance rises to $15,270.” 

One of the main principles behind the Envelope Method is that cash is tangible, making it harder to get rid of psychologically. And of course, it’s impossible to spend if you don’t have any.  Where with an online budgeting method you can see that the money’s gone the next time you log in… with the Envelope Method you literally watch it fly away.

Answer: Use the Envelope Method.

Question #2: Are you addicted to Flappy Bird?

You’re already doing all of life’s other tasks online anyway: chatting, photographing, working, shopping, playing mobile games…. why not budget online as well.  The interface is simple to use (and definitely easier than Flappy Bird).

With just the touch of your fingers (which are constantly on your phone’s screen already), you’ll be able to take advantage of the app’s long list of budgeting features: creating an emergency fund, setting savings goals, calculating a mortgage payment, aggregating your Net Worth, etc.

Answer: Use

Question #3: Are you a competitive person?

If the spirit of the Sochi Games has given you the urge to cross a “finish line,” use One of the best functionalities is the ability to track and set goals for each of your different accounts. Who better to compete with than yourself? Set a financial goal and don’t stop saving until you get there.

There might not be any gold medals in it for you, but there will be nickels and dimes galore to finish paying down your debt. This screenshot from demonstrates just how easy it is to track your goals online. screenshot budget method

Answer: Use

Question #4: Are you a citizen of the world?

If you have a bank account in any country other than Canada or the United States, the Envelope Method is going to work better for you; currently only supports those two countries. Make sure to budget an envelope for those international ATM fees, though.

Answer: Use the Envelope Method.

Question #5: Are you often pick-pocketed?

This is an obvious one – carrying around multiple envelopes of cash isn’t necessarily the most secure way to handle your money. What if someone sees your very full purse and mistakes it for a Marble Rye. For those worried about online security (any Target customers in the house?) you can rest assured that is equally as secure as your online banking sites. In their words: “we use 128 bit SSL encryption– the same security that banks use.”

Answer: Use

Question #6: Are you just sooo counter-culture, man?

Seemingly everyone is budgeting online nowadays; there are over 10 Million users on, and that’s only one of several different online budgeting tools. With your totally vintage actual cash, you’ll be the envy of everyone at the coffee house.

Answer: Use the Envelope Method.

Question #7: Are you so “hip” that you are counter-culturing the counter-culturers?

10 Million people are using it because it works. Avoiding fads is one thing, but there is no point in resisting something if it is legitimately a useful tool.  And because the company is over 9 years old, Mint-ing has certainly surpassed the “fad” stage. If you think it would help you out, go for it.  Besides, nothing’s “hipper” than being financially secure.

Answer: Use

What’s your answer?

Of course, the Envelope Method and are just two of countless different ways to budget your money. It can be fun to compare them, but ultimately it doesn’t matter which budgeting method you choose. It matters which budgeting method you stick to using. Choose the one that’s right for you, and budget your way to financial freedom.

What budgeting tools or methods work for you? I’d love to hear what tricks you use to stay consistent with you budget.

See you in the comments section!

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