The Envelope Budgeting Trick

Hands holding an envelope full of cash

Chloe Quigley, Business Exit Planning Advisor


Money impacts many parts of our lives and teaching your kids about financial planning starts with identifying and sharing your family values and goals around money. A tangible way to teach kids this is through a lesson my Dad taught me as early as 8 years old.

I received a birthday check from my grandparents. We went to the bank, cashed the check, and I happily returned home with a pocket full of cash – not so fast! With a Dad who spends his days talking about cash management and planning, I was naïve to think I could get away with haphazardly spending it without care! all of it for myself.

We sat upstairs. My Dad brought out some blank white envelopes.

“Let’s talk about where you want to put your money,” he said.

My tithe, giving to my church, was the first to go. “T-I-T-H-E” I wrote on the envelope. Under it, I chose to write 10%.

90% left. There was likely a Feed My Starving Children event to pack food for those in need overseas coming up for our family. I would have to buy something there. A t-shirt or some of those mini-M&Ms they sold to help support their cause.

“C-H-A-R-I-T-Y”: I chose to write 15%

75% left. My birthday is in September. Christmas shopping would be around the corner, my Dad reminded me.

“G-I-F-T-S”: I chose to write 20%

That left me 20% for SAVING for short term goals that went into the bank, 25% for SPENDING to my wallet, and 10% for COLLEGE into a mutual fund.

What lessons did this teach me?

  • Money is a balancing act and every dollar has a purpose. This gave a clear visual that money needs to be set aside and organized so all my goals could be met.
  • Money is finite. What would happen if a birthday party came around and my gift envelope was empty?Sunday morning rolled around and my TITHE envelope was empty? Well, I’d have to pull from elsewhere. I learned that money is finite and when it runs out for one purpose, it must be taken from another.
  • If I stuck to the envelope method, I would have enough to do what I wanted. As the years went would go on, the envelope titles inevitably changed with my priorities. College savings would become savings for rent,  SPENDING was focused on trips with friends, and all those everyday items as I began to build my own home and life. With clear priorities, values and needs, I could create space for my new wants by recreating (or balancing) my envelope portfolio.

What did the envelopes say about what mattered to me and my family? Our faith, service, generosity, my future, and fun.  Think about what titles you might work on with your children for their envelopes.

Family, random acts of kindness, travel, time with friends, sports, theater – there are endless options and plenty of opportunities to get creative.

We have conversations with families about how to teach their kids about money and preserve their wealth. We have other resources that can help guide these conversations. If you’re interested, please contact our team today.

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