Monday, June 11, 2007

Envelope Budgeting Goes Online

I've been a proponent of envelope budgeting for a long time, and have run weekend courses to teach others how powerful a concept it can be. I even had a trademark on the term for a while, before letting it lapse.

The basic idea is that you put away money from your paycheck for future bills. When the bill comes due (like an insurance policy you pay yearly) you already have the money for it in the envelope and don't have to scramble for the money.

I've had on my to-do-list for years to write software to make this easier. I currently use Quicken, which is cumbersome since Quicken's savings goals don't match the concept of an envelope. As usual, when I have a great idea that I sit on for more than a year, someone else does it. To be fair, they may have had the service back then, too. It's tough finding good resources on the Internet, even with Google. is an online site for managing personal finances using the envelope system. I haven't tried it yet, since I still need to plan how to migrate over my Quicken data (or even if I need to).

While I would have created a standalone application, I can understand the reasons behind having an online system. Convenience is great for the users, and an online system can charge a monthly fee instead of a one-time payment for software.

Their fee can be as low at $7.90 a month if you prepay for 2 years. Given how much money envelope budgeting (and other aspects of improving your relationship with money) can save you, $7.90 is fairly trivial.

Getting started with envelope budgeting does require some discipline, and a willingness to really look at what you're spending. I've mentored people on this in the past, and some have run screaming (not really, but it was close) when we started to examine what they spent. The realization that you're spending more than you earn is a hard one for some people, as is the realization that a fair amount of that spending is entirely frivolous and not contributing to your quality of life.

If you're already an envelope budgeting devotee, or just looking for a great way to take charge of your personal finances, give a try.

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