The Envelope Approach to Money Management

Steven B. Smith - Co-founder and CEO

Steven B. Smith - Co-founder and CEO

Welcome to the Mvelopes Blog.  I am very excited to bring you news, useful information and success stories from our team here at Finicity!  What if I told you there was a sure-fire way to secure a 20% raise?  Would you be interested?  Making the decision to use Mvelopes may just be the most important financial decision you will make in your life.  If you want to gain control of your money, forever eliminate consumer debt, and live a stress-free financial life, you have come to the right place.  However, achieving anything worthwhile requires desire, dedication, and commitment.  If you are merely looking for a solution to easily track your spending, but are unwilling to plan and manage your spending beforehand, Mvelopes is likely not the solution for you.  There are many products and tools available today that will help you track where you are spending your money.  And while tracking is very important, these tools are not well suited to help you really gain control of your spending and proactively determine how your money will work for you.  The difference between using Mvelopes and other products is as clear as trying to find your way through a dense forest by only tracking the steps you have taken rather than using a map or guidance system to see clearly where you want to go and the steps you need to take to get there.

When it comes to managing your money, this means proactively determining how to allocate the money you receive and then spending from a balance remaining in a spending account where these funds have been placed.  Mvelopes combines tried and tested principles with the latest technology to deliver a revolutionary system that will help you, like thousands of others, quickly take complete control of your money and immediately begin eliminating your consumer debt.  Eliminating the burden of consumer debt represents the equivalent of a 20% raise for the average American family.  Once the burden of debt has been lifted, the extra cash flow can be put to work helping you achieve longer-term financial objectives, including rapidly paying off your mortgage and significantly increasing savings and investments.  Choosing to live a debt-free life will allow you to live like few others in our society.  Finicity has the online tools, training, support, and community to make this life a reality for you.

The key to our approach is the way we help you manage the money that is deposited into your bank accounts.  Most financial software programs (including Quicken, Money, and a host of new online money management tools) track money by creating a register for each checking or savings account.  Their approach to budgeting is to create categories of spending and then assign transactions to these categories.  They then compare actual spending to forecast spending and happily tell you all the places you have overspent.  While this information is interesting, it is always after the fact and does not provide the real-time data necessary to make informed spending decisions.  Nor does it allow you to set aside money each month for periodic spending and understand how monthly spending should be reduced to meet these requirements.  For this reason, many trusted financial experts, including Dave Ramsey, Jim Christensen, Howard Dayton, Larry Burkett, and others, have long espoused what is called the envelope method of money management.  With this approach you actually allocate cash you have on hand to spending accounts that are set up for a specific purpose, and then spend from the balance in those accounts.  In a world of cash spending, this was often accomplished by actually dividing up the cash and placing it into specific paper envelopes titled for the area of spending they facilitated.

For example, you would develop a plan that would tell you how much of the cash you receive each month should be allocated to spending requirements for things like food, utilities, mortgage, auto fuel, and entertainment.  You would also plan how much of your cash should be set aside each month to meet the requirements of periodic spending for things like family vacations, holiday gifts, property tax payments, and house or car maintenance.

The envelope approach to money management has many advantages.  First, you are spending only from cash you have on hand.  Second, you are setting money aside each month to meet periodic spending requirements.  That way, when you take a family vacation, or purchase holiday gifts, the money is already available. Third, you are always spending from a balance remaining, which means you always know how much you can spend without impacting other areas of your plan.  When the money is gone, you have two choices:  (1) transfer cash from another envelope and spend less in that area, or (2) wait to spend until you allocate more money to that envelope next month.  These three advantages form clear distinctions between this method of money management, and every other approach.  Following this paradigm completely eliminates the creation of consumer debt and allows you to begin saving and investing at levels you likely never thought possible.

We now live in a cashless world.  And while this has brought with it great spending convenience, it has made following the envelope money management paradigm more difficult.  That is where Mvelopes comes in.  We have spent years developing a revolutionary system that incorporates the envelope paradigm into an online money management solution.  For starters, Mvelopes automatically connects to your bank accounts to make management easy and instantaneous.  Mvelopes also tracks all of your transactions and provides updated account balances.  The system even allows for account reconciliation, net-worth tracking, and online bill pay.  This is all done using the latest encryption technology to ensure the complete security of your data. But most importantly, Mvelopes is an online system that effectively implements the envelope money management paradigm.


The system helps you create a plan, set up envelope spending accounts, and allocate all your incoming deposits to these spending accounts. You can then create a rapid debt-reduction plan and utilize what is known as the debt roll-down, or debt snowball approach to debt elimination.  Finally, you will be able to see your progress toward achieving debt elimination and savings goals.  If you can measure your progress toward reaching your objectives, you are far more likely to achieve the success you are looking for.  Envelope-based money management, combined with the debt roll-down approach to debt elimination, have been proven to be the most effective methods of money management and rapid debt elimination—period! It is difficult to argue with the extraordinary success achieved by thousands of our customers.

Please be warned.  There are many money management solutions, new and old, making big claims.  However, you cannot merely add cool graphs and automatic assignment to a money management approach that has been largely ineffective and expect to get a different result.  People have been pounding receipts and checks into Quicken for years only to find themselves in the same poor financial situation with high levels of consumer debt.  To begin with, you must start with the right paradigm.  The power plant of a great car is its heart and soul.  Mvelopes has the right power plant.  If you are interested in experiencing something extraordinary, we invite you to take a free test drive.  You need only be willing to open the door and turn the key.  If you have found great success in reaching your financial goals by using this extraordinary system, we invite you to share your success with the rest of the Mvelopes community.

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This is your life, and being in a position to gain complete control of your money, rapidly eliminate the burden of consumer debt, and live a stress-free financial life is very possible.  Our job is to help this become a reality.