Envelope budgeting is a personal finance strategy that involves allocating money for different categories of expenses by putting cash into separate envelopes. This method is often used by individuals or households to track their spending and ensure that they stay within their budget.

With envelope budgeting, each envelope represents a different spending category, such as groceries, entertainment, or transportation. The total amount of cash allocated for each category is placed in its respective envelope, and when the money in the envelope is gone, the individual or household must spend in that category should be stopped until the following budgeting cycle.

This method can help people stay disciplined with their spending and avoid overspending on non-essential items. Envelope budgeting can also help people visualize where their money is going and identify areas where they may be overspending.

While envelope budgeting is typically done with physical envelopes and cash, there are also digital envelope budgeting apps available that can help individuals and households manage their budgets electronically.