Does the Dave Ramsey Envelope System Really Work?


dave ramsey envelope system

Do you ever find yourself spending an hour, 2 hours, even longer sometimes entering your spending details into a spreadsheet, budget software or your iPad budget app? I’ve been there, done that. It’s tedious when it gets like that and not a lot of fun. This can be the straw that breaks the camel’s back when it comes to sticking to your household budget. It’s important to track your spending accurately and regularly, but give me a break! This is killing me….

Well, I’ve got a solution to this problem.  I use the Dave Ramsey envelope system.  Do as much of your spending as it makes sense to with good old fashioned CASH. :-)

Download your free copy of the

Household Budget Starter Kit

Household Budget Starter Kit

How Does the Envelope System Work?

It’s a pretty simple system. After you have determined what spending categories you will use to track your monthly household budget with then put the predetermined amount of money for each category into a labeled envelope. If your budget is a bit more complicated you may want to choose some of the major categories for envelopes. Each time you spend money it needs to come out of the appropriate envelope.

Pros of the Dave Ramsey Envelope System

One of the benefits of this system is it forces manual adjustment of the budget if you over spend in a particular category. The simple process I teach about budgeting is:

Create –> Monitor –> Adjust

The monitoring becomes easy. You can physically see how much money is in your envelope. When there is no money left in that envelope, if you need more you are forced to take it from another envelope (or other spending category). You have adjusted your budget the same as if you were tracking it on paper. This is a good household budget tracking option for anyone, especially for those who are not computer savvy.

I think using this process can build in spending control for some. If you are like me you like to see that cash on hand, not an empty envelope. If I know I have money earmarked for something special I can hang on to it for months. If it’s just blow money in my wallet not set aside for anything special I tend to spend it faster.

Cons of the Dave Ramsey Envelope System

The downside of using the envelope system is you are carrying a lot of cash on you. Maybe you are the type that doesn’t like to do that, maybe you don’t care. It’s definitely one of my concerns, but I don’t let that prevent my wife and I from using this technique. Maybe you see this technique as a bit too manual, because you are the type that likes to do everything on a computer or smartphone.  There are electronic versions of this system available if you want to give it a try.  One way to deal with potentially carrying too much money is to leave some of the money at home.  Only take with you what you plan to spend on your current shopping trip.  Ultimately, you just need to use some common sense about how much money to carry on you and plan ahead.

How Do I Use This System?

Using the envelope system, following are the spending categories my wife and I use in our personal budget:

  • Entertainment
  • Restaurants
  • Groceries and Household (one category)
  • Clothes (separate envelopes for Mon, Dad and Kids)
  • Blow Money (Mom and Dad)
  • Kids Earned Money (used to let the kids earn money occasionally)

When we started using this system we just used regular envelopes.  This works okay, but can get a little messy with all of those envelopes.  We eventually started using the Dave Ramsey envelope system kits.  We are still using these today.  A lot cleaner and easier to manage.

This system work for me.  What do you think?  Will the envelope system work for you?

Take action:  Try the envelope system for 1 month.  Be patient.  It seems old fashioned and weird, but it works.

Leave me a comment below with your questions.  How do you track your spending?

photo credit:  Tim Morgan via Flickr


Download your free copy of the

Household Budget Starter Kit

Household Budget Starter Kit




Michael Taylor is the founder of the Household Budget Coach blog. He is the father of 3 boys and 1 daughter and is married to his beautiful wife Amy. He enjoys hiking and camping with his family and the occasional amusement park. He and Amy have been living debt free since September 2009. Find out more about Michael on . You can also connect with him on Facebook and Twitter.

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