Envelope Budgeting Mode

What is Envelope Budgeting?

Envelope budgeting is a method where you allocate your income into specific spending categories, or envelopes. Each envelope has a set budget, and you track spending against that budget throughout the month.

This method originated from the practice of putting cash into physical envelopes for different expenses. BeDebtFree brings this proven technique into the digital age.

Setting Up Your Envelopes

Step 1: Create Categories

Start by creating envelopes for your main spending areas:

Housing (rent, mortgage, utilities)
Transportation (gas, car payment, insurance)
Groceries
Dining Out
Entertainment
Personal Care
Subscriptions
Savings
Debt Payments

Step 2: Allocate Your Income

Distribute your monthly income across your envelopes. Make sure your total allocations do not exceed your income.

Step 3: Track Spending by Category

When you make a purchase, assign it to the appropriate envelope. BeDebtFree shows how much remains in each category.

Rollover Funds

One powerful feature of envelope budgeting is rollover. If you do not spend your entire Groceries budget one month, the remaining amount can roll over to the next month.

You can configure rollover behavior for each envelope:

Full Rollover: All unused funds carry forward
No Rollover: Budget resets each month
Partial Rollover: Set a maximum rollover amount

Managing Your Envelopes

Overspending

If you overspend in one category, you have options:

Move funds from another envelope to cover the overage
Let the negative balance carry forward
Adjust your budget for next month

Adjusting Allocations

Life changes, and so should your budget. Review your envelope allocations monthly and adjust based on your actual spending patterns.

Best Practices

Start with broader categories and refine over time
Review your envelopes weekly to catch overspending early
Use the rollover feature strategically for irregular expenses
Prioritize your debt payment envelope to accelerate payoff