Does anyone use "budgetting" envelopes like I've seen on TikTok?

[BernadetteRostankowskiWolowitz]

So every now and then the algorithm throws up a video where they have a set amount of cash they divvi out between categories, and they sit each month and decide where they will allocate their money.

I know it can be done by way of digital "pots" on something like Monzo, but this is cash, in envelopes.

I do like the idea, but as we move into a cashless society, I wonder how effective it actually is.

I'd love to hear if anyone does this in person and how they find it.

A friend used to do this when we were both young and newly married in the 70s. Her husband used to get paid in cash in an envelope every Friday and would 'tip up' (which meant he put his unopened pay packet on the table). She would give him back some pocket money and the rest would be divided into different containers of some sort not sure if she used envelopes but it was physically separated out for each bill that needed paying that week or month and the rest would go in her purse for food and household needs.
Every Monday she would go to town and visit the Electricity Board, the Gas Board and anywhere else where she needed to pay bills and pay in pound notes.

From the start I and my partner were paid into a bank account and bills were paid by standing order - thank goodness.

Yes, we've done it in the past (UK). Really helps to get on top of your spending. Not for your direct debits obviously, but for food, leisure, clothes, etc. I especially liked having a 'family fun' envelope - if we had lots of money in it, it was a reminder to do more fun things together, whether that was days out or buying things to do together at home. If there wasn't much money in it then we'd do something together that didn't cost much and stayed within budget, even if only a walk with a chocolate bar as a treat. I always wrote down on the envelope what we'd spent the money on so it ended up being a reminder of a lot of happy memories too.
This system really helped us get on top of our spending. I'd certainly recommend it as a short term exercise for a few months to see where your money's going. I do essentially the same thing with monzo pots now instead.

I used to do this when I was a student, it was brilliant especially when it came to nights out. Take what you can afford to spend, then go home. I do worry that our DCs are really going to struggle without that kind of concrete reminder that money isn't finite.

I'm in the UK, we do this for our household money (albeit in Monzo). We have a budget spreadsheet that we both have access to and have a budget chat on the last day of the month. Stuff gets split into larger groups like groceries (includes any household stuff we need like toilet paper, cleaning supplies etc), dog, fuel, dates, gifts etc

Some of the pots, like gifts, just accumulate month after month but it means that when you do have a gift heavy money you've got the money there to pay for them. The other pots like groceries or fuel get emptied at the end of each month with the leftovers going to savings.

Its a little bit more thought but its saved us literally thousands in mindless frittering.

I have three pots - one for big dream holiday, one for Christmas, one for holiday spending money, I try to put £5 - 10 in each every week.

Apart from the big holiday pot which is a terracotta pot you have to smash to open it, it means I can dip into them if I’m a bit short one month. I usually end up up £4 -500 in each.

The big pot apparently holds £2000 in £1 coins, but as I put notes in we hope to have enough for a big holiday in 3 years time when I am 60 and my son is 21

@BernadetteRostankowskiWolowitz

Those who do the equivalent online, do you sit and transfer funds at regular intervals to put the money where you want it, or do you set up standing orders?

With YNAB you do a budget once a month where you move the money you have around into the different ‘envelopes’ - but your physical money just stays in your bank account.

It’s hard to explain but in essence it’s an envelope budget-to-zero system and it’s really effective.

No stationery, though

Does it link to your bank account?

I watch a few You tubers who do this - Rainbow Budgets is my favourite, she's UK based. There's something so relaxing and organized about it! I don't do it myself though.

We do it with our bank- starling- so each month mone automatically gets transferred to pots which are named
Bills
Summer holiday
Ski holiday
Child a
Child b
Mortgage
Then what’s left we divide into 4 and put that into a personal pot to manage over the month for ourselves
We also have all of our spending rounded to the nearest £1 and the rounding goes into another pot.

It's called Zero based budgeting and is popular with Dave Ramsey followers. When I'm being organised, I use an ancient windows copy of YNAB to work out mine. The only envelope I have is for cash-based activities such as my subs for the kids sports and scouts.

Same as pp above I have a bank account with Starling and have different saving spaces which I send money into on payday. I’m saving up for cosmetic surgery and enjoy seeing my “New Tits” fund going up each month

Yes it's how I learned to manage bills and budget fresh out of uni in my first job many years ago. I used to leave exactly the right amount in for rent and direct debits but never take my card out. Only the cash from the groceries or fun envelope depending on destination. Worked a treat and saved me a house deposit in the end between this and living in depression damp studio flat

Yes I do it from time to time and I find it a good way to control my spending.

I change it to suit me though and I don’t use it to pay my rent or my bills because that’s all done on direct debit rather I use it for gas electric (prepayment) food, petrol, pocket money for my dds and things like coffees etc

My friend did it for a, while

@BernadetteRostankowskiWolowitz

Those who do the equivalent online, do you sit and transfer funds at regular intervals to put the money where you want it, or do you set up standing orders?

Like a PP said, with YNAB, the money stays in your account. So if I'm looking to buy a new dress for £100, my bank account might say I have £5,000 but if I check my budget on YNAB my clothes category might only have £20 left. I can't just spend the £100 because the rest of the money in my account has already been given a purpose. I could choose to readjust my budget by taking money allocated to non-essential spending like eating out or makeup and moving it to clothes or I can accept that it's not in the budget and forgo the dress. The trick is to always look at your budget before spending, never your bank account. Of course if you move money from a different category (look at it as an envelope) then I have less money left in the category ("envelope") I took it from.

I used to use a spreadsheet with allocated pots for each month. Some fairly regular like phone/electricity etc. Some variable like travel or clothes.

Simple formula at the bottom that divided the amount left by the number of days left in the month. So £150 on day one would be a fiver a day, but by day fifteen if I hadn't spent any it would be a tenner. If I spent fifty, then with ten days left it would be still be at £10/day left.

Preferred that for budgeting. Made it worth deferring purchases, until I usually changed my mind.

@MinorWomensWhiplash1

Same as pp above I have a bank account with Starling and have different saving spaces which I send money into on payday. I’m saving up for cosmetic surgery and enjoy seeing my “New Tits” fund going up each month

Please could you rename it “Tits Up”?

@BernadetteRostankowskiWolowitz

Does it link to your bank account?

Not in the U.K.

There’s an app you can use on your phone, or you can enter it into the website.

Have a look here:

Not with actual cash in envelopes. I feel paper money is less and less popular especially with covid.

Me and DH don't really need to budget but my DSis really does. She lives alone and is in a low salary. Instead of dividing money up in envelopes (which would be tempting to open early) she gives all of her disposable income to me. I put it in my savings account and give her 1/4 back every week so that's her budget.

I know that sounds a bit extreme but she has got herself into trouble so many times (she's almost bloody 40!!) that this is really the only way to make sure she isn't totally skint halfway through the month and can't afford food or heating.

I did it for a few years about 6 years ago. Bills would be paid from my bank account and Everything else was taken out in cash. I had little envelopes in my handbag for Food, Petrol, Fun (anything else) and if I had a specific expensive event / occasion that would get a separate budget too. I’d divide it all up and the beginning of the month and that was all I had to spend.
I could move money from envelope to envelope but I couldn’t increase the total spend. My budgeting was incredible. I was living in next to nothing. It wasn’t fun though.

My mum does this. She withdraws her pension on a Monday and it gets divided into envelopes. She doesn’t have any direct debits (she’s only had a bank account for six months!) so all bills get paid in cash.

I honestly don’t know how it works?

Gets paid into bank.
Withdraws money to put into envelopes.
Puts money into bank.
Direct debits go out.

Am I missing something or is it pointless?

@Chichimcgee

I honestly don’t know how it works?

Gets paid into bank.
Withdraws money to put into envelopes.
Puts money into bank.
Direct debits go out.

Am I missing something or is it pointless?

They either don’t have Direct Debits, or they leave enough money in the account to cover them and withdraw food/travel etc money.

I do this with Starling. Couldn't be faffing with notes and envelopes though in this day and age! It works for me though doing the same method digitally on Starling. I budget for everything this way, plus I keep a spreadsheet as well to track purchases. The concept of it is fantastic, just can't abide cash (and will cash even be around in a few years?), but it doesn't necessarily work for everyone, there is no magic trick to fix your finances and different things work for different people.

When I do it I leave the direct debit money in my bank and take out the rest. I have plastic wallets from poundland to split the funds.