“Envelope budgeting” is a popular method where you categorize all your income for specific purposes (e.g., utilities, rent, car) and put a strict cash amount in designated envelopes. Once that cash is gone, it’s gone, so you don’t overspend. The idea has been made popular by many personal finance gurus like Dave Ramsey, and we’ve made envelope budgeting a huge part of our courses.
We at Banzai echo the belief that every dollar you earn should be categorized and given a specific job, to make yourself accountable and mindful of wasteful spending.
The cash envelope system works for a lot of people, but we think we can do even more.
Cash envelope budgeting is limiting because you have to have cash on hand, which makes this method harder to implement and less secure than a checking account. Because most transactions are now handled digitally, we teach the principle of envelope budgeting for a digital world.
All our courses (Plus, Teen, and Junior) simulate multiple scenarios where students receive income, have expenses, and make financial decisions. When students get income in Banzai, they have to distribute it into budget categories, similar to to the popular cash envelope method.
The account shows where your money is. The individual budgets show what your money is for. Many adults don’t track their checking accounts very well, and we hope to change that. Our version of envelope budgeting teaches that it’s all about trade-offs. If you choose to overspend on food one month—which almost all adults have done—there’s nothing inherently bad about that, but you don’t just shrug your shoulders and move on. Instead, you take the difference from another part of your budget.
Our method of envelope budgeting is a fresh take that builds on the cash envelope trend and helps students understand how to look forward on what they want to spend instead of just looking back on what they’ve already spent.