Mvelopes: Budgeting the "New"
Old-Fashioned Way
Having a system that tracks how and where you are spending your money is key to making smart financial decisions. And while we don't necessarily favor one approach over another, we do like the simplicity of the "envelope" system.
This cash-based system involves dividing your income into various spending categories (gas, groceries, entertainment, and so on), and then physically putting cash into envelopes marked for each category. As you spend, you withdraw money directly from the envelopes. When a particular envelope is empty, you either quit spending from that category until your next paycheck (!), or transfer money from another envelope. (Of course, transferring could create a shortfall elsewhere.)
The problem with the envelope system is that it's not very practical in an age when so much spending is done electronically or by check. But now the envelope system has been adapted and updated for the 21st century through an online service called Mvelopes Personal. It uses "virtual" envelopes rather than physical ones. Being an only moderately satisfied user of Microsoft Money, I'm not opposed to looking into new systems. So I signed up for a free 30-day trial of Mvelopes to see if it could persuade me to leave seven years of Money behind.
As with most online memberships, upon joining you receive a username and password. After logging in the first time, you're asked a series of questions about your various accounts (banks, credit cards, etc.). Assuming you have online banking at one of the over 13,000 banks Mvelopes supports, your information is gathered seamlessly and connections are established to your existing accounts.
Next, you have the option of watching several topic-specific tutorials or trying to figure things out on your own. I recommend the tutorials. (Yes, I tried doing the set up without help but got confused!)
The primary function of Mvelopes is to track your spending in almost "real time." For example, if you go out for lunch tomorrow or buy something at the hardware store on your way home from work, the next time you log into Mvelopes, those transactions will likely be there—imported from your bank or credit card company. All you have to do is "post" your spending to the correct "envelopes" (i.e. spending categories).
But Mvelopes allows you do more than simply track your spending. It also helps you set up a spending plan (think "budget") so you can be sure you're not overspending in any of the various categories. Setting up a plan allows you to fund your spending categories at the levels you decide.
Where Mvelopes really shines is the ease with which you can assign a spending transaction to a particular "envelope." You simply drag a transaction from the New Transactions section (info imported from your linked accounts) and drop it into the appropriate envelope. Mvelopes automatically subtracts that transaction and updates how much money you have left in that particular category.
Consolidated on one page, you can see how much is in each "envelope," what's available in your Income Cash Pool (money not yet allocated to envelopes), and the balance in your bank account(s).
Another benefit of using a Web-based service is that you can control your entire budget, run reports, and update your "register" from any computer with Internet access. That's great for frequent travelers. While Microsoft Money let's you see a scaled-down version of your accounts online, it can't compete with Mvelopes. Furthermore, Mvelopes gets periodic updates that improve functionality without requiring a new software purchase.
But being Web-based also has a downside: the lag time after every click of the mouse, caused by the fact that Mvelopes has to pull different pieces of data from different parts of the Internet and make computations. If you're accustomed to using a program that resides on your computer and runs quickly, the wait can be frustrating.
So will I make the switch from Microsoft Money to Mvelopes Personal? Probably not. While I certainly prefer the envelope feature over the budgeting approach used by other money management programs, I'm not willing to sacrifice having access to recurring bills/deposits, the depth of reporting features Money offers (like the Cash Flow projector), and being able to track various investments.
But if you're an envelope budgeter (or would like to become one), and you're (1) tired of carrying cash, (2) not interested in a bunch of extra bells and whistles, and (3) would like to be able to check on your finances from any computer with Web access, Mvelopes Personal could be the perfect solution. The cost is $10-$11/month if you pay upfront for a year.
Mvelopes is available in a special Crown Financial Ministries-branded edition or you can order the regular edition at Mvelopes.com. 
- From the SMI Message Boards: Watch your Mvelopes free trial dates carefully
- Six Keys to Responsible Spending
- Save by Paying Yourself First
- SMI's Money Saving Tips page
- Got a question or comment about this article? Discuss it on our Message Boards.
