The Envelope Method: How It Works

Physical version: 1. At the start of the month, withdraw cash 2. Divide into envelopes: Food, Transport, Leisure, etc. 3. Use only money from the respective envelope 4. When it's empty, stop spending in that category

Digital version (with PaxMoney): 1. Set category limits at the start of the month 2. Record each expense in the corresponding category 3. Track remaining balance automatically 4. PaxMoney shows how much you can still spend in each "envelope"

The digital version is more practical and allows trend analysis that physical envelopes don't offer.

The envelope method is ideal for:

• •Impulse spenders — The physical/visual limitation forces awareness
• •Beginners — Simple to understand and implement
• •Couples — Visual and transparent for both
• •Problem categories — Use envelopes only for areas where you overspend

Tip: You don't need envelopes for everything. Combine with the 50/30/20 rule and use envelopes only for variable categories like food and leisure.