How to budget with the envelope method
Give every sum a job before you spend it, then look at what is left: the envelope method explained, with a worked example in numbers.
By Rivel Babindamana4 min read
This guide explains the envelope method, then how Vukassa applies it. But first, a simple question: why make a budget? Then come the method itself and what it becomes in Vukassa, with an example.
Why make a budget
A budget is a plan for your money. You decide in advance what your earnings will be used for, instead of finding out at the end of the month where they went. It does three things:
- Know where you stand. At any moment, you know what you have left to get to the end of the month.
- Choose instead of putting up with it. A big expense becomes a decision, not a surprise on your statement.
- Really set money aside. Savings get their place from the start of the month, instead of being what is left at the end, which is often nothing.
Yet few people stick to one: only 16% of French people say they keep a budget set by type of spending1. Most of the time, you start out motivated, on the 1st of the month, with a brand-new spreadsheet. Three weeks later, it is no longer filled in. It is not a lack of willpower. What is missing is a good method. A simple method, close to the one our grandparents followed without even thinking about it.
The envelope method
Motivated, you look for a way to go about it, and you soon come across it: the envelope method. It proved itself on paper, then in spreadsheets. Today, it lives in Vukassa.
Envelopes on the living-room table
Imagine a grandfather, fifty years ago. On payday, he takes out the month’s money and sits down with his wife at the living-room table. In front of them, a row of envelopes, each with its label: rent, groceries, going out, gifts, the money set aside. Together, they share out the bills down to the last one.
During the month, every expense comes out of its envelope. When the one for going out is empty, going out stops until the next payday. And if groceries run over, they take from another envelope, choosing which one: the total does not move.
From paper to phone
The spreadsheet brought the math, but it stays on the computer. Your phone, on the other hand, is always with you. You can see at any moment what is left in each envelope, before you pay rather than after. And you note an expense or some money coming in where it happens, at the checkout or on the bus, without waiting until you get home.
What Vukassa does
Vukassa takes the method as it is and helps you stick to it, in its free version and with no limit on the number of envelopes:
- A guide to distribute your money. For your first budget, the app walks you through it step by step: your income first, then your fixed expenses, a little savings before everyday spending, and finally what is left. It suggests amounts based on your income and warns you if you distribute more than you earn.
- Five categories, five colors. Each envelope takes the color of its category: Income Fixed expenses Variable expenses Savings Investment
- One icon per envelope. You recognize each envelope at a glance: Groceries Rent Transport
- A bar that moves forward. Under each envelope, a bar shows what is already spent, and a word tells you where you stand: Serene Watch Tense Overshot
- A month you pick up again. The next month, your envelopes can come back on their own: all that is left is to change what has moved.
An example
Let’s take a made-up income of 2,000 a month, with round amounts so it is easy to follow. On the 1st of the month, everything is distributed:
Income2,000
- Salary2,000
Fixed expenses900
- Rent and charges700
- Bills and subscriptions200
Variable expenses700
- Groceries300
- Leisure & going out200
- Transport100
- Unexpected costs100
Savings300
- Safety net200
- Holiday100
Investment100
- Stocks100
On the 20th of the month, there is 90 left in “Leisure & going out”. A friend suggests dinner for 40: you check the envelope before saying yes, and there will be 50 left. A week later, groceries run over by 30: you lower “Leisure & going out” by the same amount to top up “Groceries”. The budget bent, it didn’t break.
Conclusion
A budget is there so you know where you stand and decide about your money before it is gone. The envelope method makes this simple: you distribute all of your income at the start of the month, each expense comes out of its envelope, and when one is empty, you move money instead of inventing it. Vukassa keeps these envelopes in your pocket, with a guide to fill them and a quick glance to see what is left.
As a couple. The method works for couples too: with Premium, you keep one shared budget, and every entry shows who made it. The details are on the Premium page.
Start this month. The simplest thing is to try it: install Vukassa and distribute your first month.
Notes
-
L’ObSoCo for BforBank, financial well-being barometer, second edition (in French), press release of March 13, 2025; survey of 2,000 people aged 18 to 75 in mainland France, from January 27 to February 6, 2025. ↩