The Dave Ramsey envelope system has helped millions of people pay off debt and live a better life; myself (and my husband) included! But after 4 years of using the envelope system I was fed up with the flimsy paper, the tearing, and the fact that I had to carry such an ugly wallet!
So I came up with a simple, no-sew alternative to the Dave Ramsey envelope system that cost less than a dollar and works even better than the original!
Early in our marriage my husband and I made some foolish money decisions that have cost us far more than just the money it's taken to repay the debt.
Those decisions plagued every moment of our lives for the following 8 years and we are only just now coming out from under all that debt with the help of our family blog!
Many people had mentioned Dave Ramsey's method of budgeting to us, but we always blew them off. Oh how I wish we had listened sooner!
Finally, we started working the Dave Ramsey system, and I even further worked to save money by developing my own Food Budget System that allows us to eat an all organic diet for $300 a month!
Now just a few years after finally making these changes we have paid off over $75,000 and are almost completely debt free!
But as perfect as the envelope system is in theory the practical application of the idea left a lot to be desired.
I gave up my beautiful leather wallet and replaced it with this rather dull looking blue one that came with the Financial Peace kit. For a while the sacrifice seemed worth it, but I wish I had figured out this method option sooner!
The paper envelopes tear easily (and you need to buy new ones), you can't keep change in the appropriate folders because it falls out, but there isn't a separate pouch to store the change, so it just ended up at the bottom of my purse. There was also nowhere to put ID card, debit cards, or membership cards... so they too littered the floor of my purse.
Every time I needed my ID I had to dig through my purse, hoping I could find it quickly. It was so embarrassing. Finally, I sat down and figured out an alternative.
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No-Sew Alternative to the Dave Ramsey Envelope System
Since I had a beautiful leather wallet from my grandmother, I knew I wanted to figure out an alternative to the envelope system that would work with an existing wallet.
And since I had a newborn, I wanted to make sure that whatever idea I went with was a no-sew, easy and quick method that I could throw together in 5 minutes or less!
Step One:
I went to Target and grabbed a plastic folder in red (my favorite color, pick your favorite color for yours!). It cost $0.98 and I actually have enough left over to make another one!
Step Two:
Then I measured the size of my wallet, marked the size with sharpie, made tabs and got to cutting.
Make sure that you are staggering the tabs along the top as you cut so that you can see all the labels once you're finished.
Step Three:
Place all the dividers in order of tabs, then label them with a sharpie starting with your most used category on the left.
From there, I just slipped the dividers into my favorite wallet and labeled them appropriately.
Now I have a place for my change, all my cards, photos of friends and family, and I still get to keep my money organized by category!
Plus, the smooth plastic material helps the money slide much more easily and makes having separate categories much easier to manage.
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4 Year Review
Updated: I've been using this method for about 4 years now, and I can say without hesitation that it is a thousand times better than the original paper envelope system.
My purse is clean, I can find things quickly, and I never lose my drivers license! I'm absolutely in love with this new method, and I hope you enjoy it too.
Michelle says
I have been searching for years for a method to successfully manage my money. I just discovered Dave Ramsey and I will be sure to put into practice what he teaches. I have also been trying to budget my money and I’ve looked at several types of envelope systems. They are all either too pricey or too complicated for me to make.
Your idea is Fantastic!! And the cherry on top is that I can use materials that I already have so I won’t have to spend anything. Thank you so much and I look forward to reading more of you blog. From a struggling but determined single mom in Japan.
Victoria says
Oh Michelle, I’m so so glad you stopped by! I hope you love this new method as much as I do! I’ve been using it now for about 2 years and it’s still in perfect condition!
The Dave Ramsey method is “simple” but it’s definitely not “easy”. However, it is very worth the effort! You can do this, I believe in you friend! <3
Thanks again for your comment and good luck!
Robyn says
What a lovely idea! I just started my second time through Financial Peace University, and I honestly wasn’t looking forward to trying to use the original envelopes again or buying a refill. Of course, I kept my original wallet for ID and cards, so having two wallets in my purse was not fun. Out of curiosity, what do you do with your change now? I tried to keep my change in the envelopes so I could account down to the penny what I spent in each category, but that was frustrating. Do you just use it when you need it, no matter what category you’re spending out of? I’m thinking of doing that and/or allowing myself an occasional Dr. Pepper from the work vending machines. :P
Victoria says
Thank you Robyn! We love the system but really hated those envelopes. Ha!
For change, I just keep it all in the normal change pouch of my wallet and use it as needed regardless of category. At the end of the month whatever is left over goes into a jar and once the jar is full I cash it in!
I’m a Dr Pepper fiend too (shh, don’t tell anyone)! Grab a 12 pack at the store once you have $5 in change and you’ll get a lot more Dr Pepper for your money!
Good luck with getting back into the system and enjoy a drink for me <3
Lola says
U should make a savings jar… for any change u get and at the end of the year us it for semi annual shopping money to treat urself.
Victoria says
Great idea Lola! You know, we actually do this already, I don’t know why I haven’t written it up! Love this idea and we usually have about $100+ dollars every time the jar is full!
Michele Jones says
What I do for the big monthly categories is I set up several savings accounts. I manage these online and just transfer the money into them and then transfer the money back right before writing a check. That way the monies don’t get mixed up. I also got a plastic coupon organizer from the dollar store for the big yearly expenses. I mark these with categories like: Christmas, Birthdays, eye exams, car repairs…then they are out of my main envelope system. I use the main envelope system for regular categories like: gas, food, haircuts, restaurants, Walmart, postal…then I only put in my purse or grab it as I need so I don’t have to carry as much cash in my purse. Combining all these has worked for me! I teach FPU by the way!
Victoria says
Hey Michele! We do that too! Great idea and it has really worked for us too. I’ve found that if I don’t use cash for the smaller things (outside of house payments and whatnot) I always end up spending more though… so we just stick to the big items only!
Glad to know you teach FPU and this method is approved! ;-) Thanks for stopping by!
Julie says
Thank you so much for sharing this idea! I’m glad I saw it before I started the envelope system. I didn’t really want a separate “wallet” in my purse so this was the perfect idea for me. I knew right away it would be better than paper clips and binder clips. The plastic folder is a great idea and it only cost .50 ! I just put all the change in my change pocket in my wallet also and use it for all the cash accounts too. I have a smaller change purse that I keep my personal money in that doesn’t take up much room in my purse. I can’t brag enough about this post! Thanks again!
Victoria says
Awww thank you so much Julie!! After many years I still have this same set up in my purse as we speak! I’ve never had to replace any part of it. I’m so glad you loved it and I hope you love the system too! Thanks for stopping by!
Cherrie says
Thank you for this! I never purchased his envelope system because of the terrible ratings it had for the easily torn envelopes. I bought some from Amazon. They were durable but so big. FINALLY, I just made my own with some colorful card stock, similar to yours and viola, I am in heaven! i get to use my beautiful leather wallet AND use the DR system which I LOVE!!! I have saved a TON of money by NOT SWIPING my debit card. You ROCK and so many people are going to be encouraged by your post. Thank you and God bless!!! Oh and happy saving!!!
Victoria says
Awww, this made my night Cherrie! Thank you so much for your comment, and God bless you and your family! <3