Our Budget System
A sustainable envelope system that looks forward, not back — weekly, flexible, and built for real life.
What makes Savvy different
Over years of practice, we’ve settled on a unique modification to the classic envelope budget system that is sustainable and actually helps you modify your spending behavior, not just feel bad about it after the fact.
Weekly
Many budget systems operate on a monthly timeframe. We’ve found this is just too long and doesn’t match the rhythm of life. Some spending is monthly, like bills and housing, but most of the variable discretionary spending that we have control over is better to monitor on a week-to-week basis.
Future centric
Most budget and money apps focus on past spending. While we have good historical data, our envelopes are primarily forward looking. Having visibility to upcoming problems is critical to modifying spending behavior before you get into trouble. We keep 120 days of future envelopes forecasted at all times so you can plan out the next couple months.
Flexible
You’ll set up a fixed budget consisting of weekly and monthly expenses which are then populated into the weekly envelopes grid, but the reality of any very detailed plan is that life will happen. When it does the important part is reacting properly: offsetting unplanned expenses with caution elsewhere in your budget.
Envelopes for everything you spend on
The first step is to create envelopes for everything you spend money on. The classic budget requirements apply here: your budget should have a slight surplus (we recommend less than 1%), and it should have some slack — a Miscellaneous envelope, and a couple envelopes like “Car Maintenance” or “Home Maintenance” for those expected unexpected expenses.
Envelopes can be set up as Weekly for most regular expenses like Groceries, Gas, and Clothes, or as Monthly for bills like Rent / Mortgage, Cell Phone, and Electric. A core part of your budget should be savings for annual expenses like Christmas, Birthdays, or Vacation, set up as Weekly expenses. Saving for these planned annual expenses every week takes the drama out of your financial planning and makes you feel in control instead of out of control when they inevitably come around.
At first you’ll start with a smaller number of envelopes, but as you see yourself spending money out of a Miscellaneous envelope, if it’s not a one-time expense you should consider setting up an envelope. For our family of 5 we have nearly 80 envelopes, and we’ve gotten our Miscellaneous envelope down to 6% of our budget. The feeling of “there’s an envelope for that” is where the system really pays off.
Your main view: Envelopes
The main page you’ll visit every time you review money (after updating Transactions) is Envelopes. This grid has each envelope down the left side, and each week across the top.
This week’s buffer is your total cash in all accounts (credit card balances count as negative), minus the total balance of all envelopes. Future week buffers are the prior week buffer, plus any planned income in that period, minus any planned envelope contributions. Each week’s buffer is the planned “slack” you have that week, and we call the lowest future buffer amount Available to Allocate.
No negative envelopes, zero Available to Allocate. These are your two goals each time you update Savvy. We recommend maintaining your Available to Allocate balance at zero because it helps you see when things happen that need to be adjusted. Negative envelopes represent overspending that needs to be offset elsewhere. By moving money around you are mentally earmarking how you’re going to bridge that gap.
Here are several common scenarios and how you should react:
Unplanned higher income will increase your Available to Allocate. Transfer into any envelopes you’d like to bring it back down to zero.
Unplanned lower income will decrease your Available to Allocate. Transfer money from one or more envelopes into Unallocated to “fill the hole” and bring it back up to zero.
Overspending in an envelope will make that envelope balance negative but will not impact Available to Allocate. Transfer money from one or more envelopes into the overspent envelope to “fill the hole.” Once you have a large total envelope balance you can let negative envelopes ride for a week or two and let their weekly budgets catch up.
Underspending in an envelope will leave that envelope balance positive. If you’re piling up too much in an envelope, you can eventually move it to another envelope as needed.