In the old days, people swore by what was called “the envelope system.” You have different envelopes marked for “rent,” “utilities,” “groceries,” “back to school,” and whatnot, and then tucked cash into each envelope at the beginning of the month. Then stick to the spending plan.

Today, that’s a system that seems to have been defeated by modern technology. Even low-wage workers typically get a personal debit card issued, and almost no one handles cash anymore. But that doesn’t mean we can’t apply the same thinking, using modern methods.

Today’s “envelope” budgeting can be done with a simple spreadsheet. And don’t worry, you don’t have to spend top dollar on an install of an office suite. There are many free spreadsheet and office supply suites available. Open Office is a Free and Open Source alternative which runs on any platform and runs comfortably in a laptop. There are other free spreadsheet programs available, plus even Google Docs has a free online version of spreadsheets.


So you take a new spreadsheet and go down the far left column, labeling them the same as you would envelopes. Then enter a balance next to them, allocating for expenses as you go. This system requires a bit more overhead because every time you spend out of any row, you have to update the sheet for that row. You can save your receipts from purchases throughout the day and enter them at a set time each day or once a week.

A more sophisticated method is to use a specialized budgeting platform. These exist in free form as well. There are apps available for Android and iPhone, or there are online portals that are free to use. is one such resource. Once you create a free account, you will need to add your debit/credit cards. After that, the system automatically does the bookkeeping for you. You can’t ask for better service than a free personal accountant.

If you’re dead-set on the envelope system or want to keep it as simple as a memo pad, that’s fine too. Personal budgeting should be as painless as possible.

When budgeting, the rule of thumb is typically “50/30/20,” where 50% is for necessities (rent, utilities, transport), 30% is for luxuries (entertainment, leisure, hobbies), and 20% is for savings. This system assumes you have no debt, but if you do have debt to pay down, consider it part of the “necessities” first, because debt interest is eating money you have now and will continue to be a financial burden in the future.

A word on savings: It is wise to hold back money for emergency situations, unexpected expenses, and other fudge factors. But past a certain point, your money is wasted just sitting there. If you have money that you can guarantee you won’t need soon, there are a number of small-scale investments you can make with it. Ask your bank about a personal 401(K), for instance, which typically has no minimum payment, so you can sock away whatever dollar amount you feel comfortable with. The suggested minimum for best performance is 3% of your income, and keep in mind that this is figured as coming out of your income at tax time.