Why I Use the Envelope System

It helps me remember how I really want to spend my money.

Photo credit: Saaleha Bamjee

My parents saved money in a lot of different ways—but the savings method that stood out to me the most, as a child, was when they would put aside a small amount of money in a part of their room that they couldn’t access on a whim.

I think that’s why I thought it was a good idea to find an empty envelope and put in a few dollars in it in anticipation of the 2011 NYC Comic Con. Within a month and a half, I had over $200 in the envelope, which I stashed under my mattress. I was able to buy a ticket, snacks, and a bunch of other anime and comic paraphernalia to remember the event by.

Afterwards, I kept using the envelope system to save up for holiday shopping, bills, school supplies, and hanging out. Then I saw someone post a money-saving “equation” on Facebook that highlighted saving a dollar on the first day and then a dollar more on each consecutive day. So, on the first day I put one dollar in an envelope, the next week I put in two dollars, and the day after I put in three. It was pretty easy to follow the formula until I made it to fifteen dollars. By then I had already decided that regardless of how much money I had, I would put in at least a dollar in that envelope every week.

I then opened up two more envelopes. One was for random singles and change so that I could have pocket money for hanging around NYC with friends. The other was for emergency future savings or larger expenses, whichever came up first.

Using my envelope system, I was able to save up over $1,000 for a trip to Poland. I was also able to save up over $500 to help buy software and other supplies for my first semester of graduate school.

Budgeting For My Poland Adventure

Other necessities that my envelope money covered included paying a tech insurance fee for graduate school during my first semester and upgrading to a new phone when I needed it for my last semester. Had it not been for those savings tucked away, I would have had to postpone those purchases—which could have hurt my grades.

One of the reasons why the envelope system worked for me was because there was money that I couldn’t simply use by swiping a card. It was easy to make a habit out of putting money away in an envelope every time I got paid at work, or every time I was given money by relatives for holidays or birthdays.

I also made sure to store my envelopes in different places around my house. Before going out of my way to find my envelopes, I’d think about if it was really necessary to take money out of them. It also made me calculate whether I’d still have enough money in the envelope for something more important if I spent my envelope money right now.

Putting a lot of the money I earned directly into my envelopes also forced me to plan for future expenses. I couldn’t put them off or tell myself that I’d figure them out when they came. My envelopes made me a lot more organized, and I also learned how much money I was capable of saving. When I decided to avoid spending envelope money so I could save it for more important plans, it reminded me how important some of those plans were. My envelopes were why I was able to pay for some many things in graduate school without having to take out loans. I knew that I wanted to pay things off right away and that saving in the long run would be a better decision than just waiting around.

Out of sight, out of mind worked for me in terms of money because it forced me to not be a spendthrift regardless of the money I had in my bank account or in my envelopes. I’m glad I held off on unnecessary purchases in order to be able to afford going to graduate school. I will definitely be using the envelope system for yet another rainy day fund.

My next envelope will help me save up for a DSLR camera, which I’ll use for freelancing purposes. Some used cameras still cost hundreds of dollars, as do lenses, so this is one of the most proactive ways for me to eventually have enough for that camera. If that works itself out, I’ll keep using the envelope system to make other important purchases or save up for other things. It hasn’t failed me yet. I hope it won’t in the future.

A native New Yorker, a sometimes writer, and a full-time journalism grad student at CUNY J. Follow and connect on Twitter @angelymercado.

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