When choosing envelope budgeting software, there are a few different considerations to keep in mind. These include whether you will be satisfied with a free program, or if you want the increased functionality of a program you must pay for. You should also decide whether you want to give the program access to your checking accounts, credit cards, and loans, or if you want to enter the information yourself. In addition, determine how you will set limits on each spending category that you determine for your envelope budgeting software, and the methods you will use to help stick to those categories.
Envelope budgeting software is based on the premise that you can successfully budget your money by creating a number of different spending categories, one for each envelope. This may include rent or mortgage expenses, a car loan, grocery expenses, and credit card bills, just to name a few. Presumably you could cash your paycheck and put the designated amount of cash in each envelope; when the cash in an envelope runs out, you know you have reached your budget limit for that category, which helps to prevent overspending. Envelope budgeting software digitizes this practice, since many people simply get direct deposit for their paychecks or make use of online bill paying.
There are a number of free programs that can be found online that offer personal budgeting under these principles. Users create their own spending categories, specify the amounts they want to have in those categories, and then pay their bills or attempt to increase their savings. The software tracks expenses and sends alerts if users exceed the amounts in their budget envelopes, which helps users to visually see where their money is going. Purchased programs may offer more functionality, such as yearly reports, pie charts, or other information, though this may only be necessary for people who have very complex budgets.
Users are required by many envelope budgeting software programs to give the program access to checking, savings, credit and loan accounts by providing account numbers, user names and passwords. Some people are concerned with the security of this practice, and instead will choose programs where you must manually enter the amount of your paychecks and bill payments. Both of these can be effective, though the first tends to be much easier to maintain, and makes it less likely that you will forget to enter a payment. Reading reviews online can be a great way to help you narrow down your choice among specific products.