The Envelope System: simple yet very effective way to budget your money

The Envelope System: simple but very effective way to budget your money
I remember my officemate and I were going to the ATM right after we received our pay.
She saw me holding my whole month’s salary.
She curiously asked me “Where will you spend your salary?”
Upon seeing her curios reaction, I told her about the budgeting system that I have and how it helped me manage my finances.


I also shared with her that I attended many trainings and seminars in Singapore regarding personal finance.

One of the most basic things that I have done and it has proven to be a very effective way to budget and plan my finances is using the “Envelope System”

Here’s what I did while I was working in Singapore, the moment I received my monthly salary.

  • I would go to the ATM and withdraw all my money.
  • I would then allocate the money to the envelopes that I have.
  • I pay myself first and use the Formula, Salary – Savings = Expense

How to do the envelope system?

  • Create a budget
    • You have to know your cash flow or how much money is coming in (earnings) and how much money is going out (expenses)
    • Start by creating a budget for the whole month (this will depend your salary being paid once or twice a month)
  • Divide your spending into clusters
    • Check your budget, and divide it into the following examples: food, gas, clothing, entertainment, etc.
    • Then create an envelope for each category. I use recycled envelopes and just label it directly.
      • Here are my actual categories
        • Ex:
          • Funds for Stock Market Investing, UITF, MF, Insurance and Savings
          • Remittance (fixed amount monthly)
          • Rent, Transportation allowance, Food expenses, Phone & Electricity bills
          • Tithe
          • Funds for Future business
          • Entertainment


  • Fill your envelopes

Fill each envelope with the money that you’ve allocated for each category.

Spend until the money is gone

  • Pay for your purchases out of the appropriate envelopes – using the Investment envelope for Stock Market Investing, UITF, MF, Insurance and Savings
  • Funds for Future business envelope for money allocated for my future business  – When you have spent the money in an envelope, don’t use money that’s from another envelope. You have to follow your budget plan. Discipline is needed for this one.
  • Put any leftover money into savings

Even if you have an envelope for savings, feel free to add money left over from the other envelopes to your savings if there is any.

  • Restock again the next time you receive your salary

Fill the envelopes the same way as the previous month, and start again.

Envelope system 


  • List down how much your transportation, food and other expenses monthly so you could allocate funds for it.
  • Be frugal but reward yourself as well. You can allocate a small percentage of your money for entertainment. I use 10% of my salary for entertainment.
  • Other people use Alkansya, Microsoft excel spreadsheet or phone apps. Use whichever your comfortable with.

Do this monthly and you will see big improvements in your budgeting and financial planning.

This is a very simple technique but it made my investments and savings grow over time. By the way, budgeting should also be done by both partners if in a relationship or married.

We all should know how to handle our money to be financially free.

Try it and send me a message, if it works for you 🙂

If you want to know and learn more on how to manage your finances then subscribe to my blog Super OFW Investor and feel free to share and comment below.


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Nolan Lazaro
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  • ayi
    Posted at 16:41h, 24 December Reply

    this is a good advise..i tried this envelope system and its effective…mine though is more detialed but i find your more practical and complete 🙂 tnx

    • nolanray
      Posted at 04:24h, 25 December Reply

      Hi Ayi!

      Thanks for your comment and for reading the blog, Super OFW investor wishes you a Happy Holidays!
      Most of the time, im only using a recycled envelope or a used bond paper and i make my own envelope how do you do your envelope system? I’d like to hear more from you

  • liann dala
    Posted at 13:36h, 16 January Reply

    Hi sir,

    Nice to know you include tithing as my monthly payment try to follow the envelope system hope it works for me

    • Administrator
      Posted at 13:40h, 16 January Reply

      HI Liann!
      Yes, i include tithing 🙂
      I’m very sure that the envelope system will work for you, Kindly message us in our facebook page or contact us page if you need any more advice regarding the envelope system.

  • rian
    Posted at 01:07h, 17 January Reply

    nakakarelate ako kasi ganyan din ginagawa ko. I am also an OFW. There’s another thing i do na wala sa article. Alam nmn natin as OFW na paguwi ng Pinas kailangan ng pasalubong. So every month nagsasave ako ng pera para sa pasalubong. Then magaabang ako kung kelan may mga Sale, lalo na yung mga Buy one Take One, dun ko kukunin ang pambili. Be wise lang sa pagbili, wag bibili ng sobra.

    • Administrator
      Posted at 09:47h, 17 January Reply

      HI Rian!
      very good strategy un. ako din bsta pag may sale, dun ako namimili dati, unti unti hanggang mapuno ang balikbayan box 🙂 thanks for Sharing!
      You can email me if you have any stories to share to our kababayans about being an OFW etc to my blog 🙂

      Welcome to Super OFW Investor

  • ivan
    Posted at 10:16h, 20 January Reply

    Hi sir,

    I think your evelope system is good. Susubukan ko po ito. I been having a hard time budgeting my finances. This is my first time abroad and I have a pretty good salary pero nahihirapan padin ako mag ipon. Tsaka after reading your articles lalo ako naging interesado sa investing pero d ko alam kung san mag-uumpisa sana po matulungan nyo ko. 😀 ..

    • nolanray
      Posted at 14:57h, 20 January Reply

      HI Ivan! by the way, i’d like to personaly congratulate you. That’s a very good start na knowing you are already making steps and reading stuffs about investing.
      That’s where i started many years back too.
      I have been using the Envelope system from many years back and til now. It never failed me *at first it might be hard, but it will get easier after 2 or 3 months of doing it.

      Update me on your progress and don’t hesitate to ask me if you need my personal help ~Nolan

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