How to use Quicken to follow Dave Ramsey's envelope system

Dave Ramsey describes using an system of envelopes to create a budget. This is done by writing a category on each envelope and placing cash in each envelope. I personally don't like to carry cash or have it sitting around at home so I have developed a method to keep track of my spending using virtual envelopes. I would like to share this method with you below.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• A Computer
• Quicken Software
• Pen and Paper - To create your initial budget.
• All of your monthly bills.

1. List out all of the categories for your budget on paper.

2. For each item in your budget create a cash account in Quicken. Title each of those accounts with "Envelope - 'category'".
   
   'category' is the name of your budget category.

3. Whenever you are paid, create a deposit entry in your main account for your payment amount.
   
   Ex: I get paid my salary through automatic deposits, so if I were to get paid $2000 then I would create a deposit entry for my checking account in quicken for $2000.

4. In Quicken transfer whatever is planned from your written budget for each category from your checking category.

5. Whenever you spend money from your "Envelopes", keep track of it in your Quicken "Envelope - 'category'" accounts.

Tips & Warnings

• It has been proven that you are less likely to spend cash then you would be to spend with a card, therefore, for you impulsive buyers, you would best be served by using Dave Ramsey's Cash Envelope System.

Resources

• Dave Ramsey's Envelope System

[SFNdust]

on 12/9/2009 @shawnpsousa I don't include credit card payments in this article for the simple fact that Dave Ramsey is 100% against the use of credit cards. His motto is repeated many times throughout his show "the borrower is slave to the lender." If you've never listened to Dave, I highly recommend it. Check out his website for more information about him and for station listings.

[shawnpsousa]

on 12/8/2009 How do you handle Credit Card payments using this method? In Mvelopes, each time I have a cc purchase and assign it to an envelope, it does 2 things: 1. It reduces the funds in that envelope by the amount of the purchase. 2. It moves that purchase amount over to a credit card payment folder. I need to know how to hand the Checking Account monthly payment and the corresponding Credit Card payment which should be equal.

[joshuaschrock]

on 8/11/2009 I use this method, it's worked well for me for a while. I have one checking account and multiple cash accounts listed in my "Banking" section. ONLY the cash accounts that are physically stored in that checking account are in the "Banking" section with this checking account. This way the subtotal of the "Banking" section always matches the actual checking account's balance. This alowes my emergency fund and all of my larger envelopes to be stored in my checking account. You must have the discipline to look in quicken to see your "available" balance instead of just looking at your account's "actual balance".

[JulieMayfield]

on 10/31/2008 Great idea! I love Dave Ramsey and I love Quicken.