If you’ve done any reading about setting up a budget or keeping track of your expenses, you’ve probably heard about the cash envelope system for budgeting.
Using Cash Envelopes for Budgeting
The idea behind the cash envelope system is that you keep your cash in separate labeled envelopes for different spending categories in your budget, literally.
For example, you might have an envelope of cash dedicated to grocery spending, another for non-food household expenses (paper towels, toilet paper, stamps, etc.), and you may even decide to use cash for things like entertainment or dining out.
The cash envelope system was popularized by personal finance guru Dave Ramsey, who advocates for the system as part of his budgeting strategy during his popular Financial Peace University course.
The cash envelope system can be a good way to help you control your spending if you choose to use your cash envelopes only and not carry any other forms of payment, like a debit card or credit card, in your wallet. Carrying cash only gives you a finite limit to how much you can spend. Even if you “cheat” by pulling money from other envelopes to cover overspending in one category, you will still be limited to only spending the amount of cash you are currently carrying.
That said, there are also some disadvantages to the traditional cash envelope system. For one, you will be carrying a lot of cash, which can be a safety concern. Plus, by carrying cash instead of having your money in a bank account, you will also be missing out on earning any potential interest on your money.
This is where Mvelopes comes into play.
What is Mvelopes?
Mvelopes is an app that provides a spinoff of the cash envelope budgeting system. Instead, you will set up your budget using the app and keep track of your spending using digital envelopes over paper ones. This eliminates the need to carry around paper envelopes stuffed full of cash, leaving you more vulnerable to theft or simply misplacing a few hundred dollars.
According to its website, Mvelopes helps users get out of debt faster, accumulate savings, and reach financial goals.
Some of the features that help users accomplish these goals include:
- Compatibility with Windows and Mac
- iPhone and Android App
- The ability to connect with your bank and credit card accounts
- 25 spending envelopes
- Auto transaction gathering
- Auto envelope spending plan view
How Does It Work?
Mvelopes claims that creating an online budget and tracking your spending is quick and easy with its online software, but from my experience, it can be time-consuming to get started from scratch with the system.
Once you create an account with Mvelopes, you have to let the software know what your financial goals are by choosing from a list that includes things like getting out of debt, saving more money, donating to charity, sticking to a budget, and more.
Once you’ve completed this step, you will go through a 4-step process to add your bank and credit card accounts, define your income, create a budget, and set up and add money to your spending envelopes.
After your envelopes are set up and funded, the program will track your expenses by category so you can see how much money you’ve spent in each area and how much you still have remaining.
What Does It Cost?
The basic version of Mvelopes is free, but it does have more limited features than the premium versions. For example, you can only connect your free account to 4 online bank accounts or credit cards. You also don’t have access to all the support features or 1-on-1 financial coaching with the free version of Mvelopes.
The next step up is Mvelopes Premier. When you upgrade to this version for $95 a year, you do have the ability to connect to an unlimited amount of bank accounts and credit cards. You can also set up an unlimited number of spending envelopes, although the 25 that come with the free version are usually more than adequate for most people’s budgets.
With Mvelopes Premier, you’ll also be able to access their “Integrated Debt Roll-Down” feature, which can be helpful if you paying off debt is your main goal. This feature allows you to put in your debt totals and view several different scenarios and pay off options which can then be added to your envelope budget.
The top tier is Money4Life Coaching. There was no price specified on the website, but it did say that “packages are customized for individual needs”. With this package you get all the features of Mvelopes Premier, plus additional support and 1-on-1 coaching for your financial needs.
How Does Mvelopes Stack Up?
Mvelopes is far from the only budgeting app out there that claims to help you with your budget and financial goals.
EveryDollar is another budgeting app that was created by Dave Ramsey. It also uses a similar system to cash envelopes. In addition, users can follow along with Ramsey’s “Baby Steps” plan and track their progress using his system. EveryDollar is one of the fastest ways to set up a budget according to users, but you can’t sync any of your financial accounts unless you upgrade to the paid version called EveryDollar Plus.
Mint is one of the most popular budgeting apps. It’s 100% free to users and allows synchronization to bank accounts and credit cards with no charge. However, users have been experiencing some problems with Mint’s account syncing feature over the past year or so. And some of the “helpful hints” on Mint are actually ads that may trick users into clicking on them and getting “talked into” financial accounts and products they don’t really need.
Who Will Benefit Most from Mvelopes?
If you are currently using a cash envelope system, then you could benefit from switching to digital envelopes with the Mvelope app. It will allow you additional security by not having to carry around large amounts of cash in your wallet, while still being able to enjoy the categorization provided by using the envelope system in your budget.
Mvelope can be used on your computer, tablet, or smartphone, giving you the ability to view your budget at any time, which is helpful for those who are constantly on-the-go. The only other drawback is that if you still opt to use cash for some purchases, those expenses will have to be added manually to your budget in order to stay on-track with spending.