I have long touted my method of using ING Direct for budgeting and it has served Linda and I well. It has been a free and fairly simple method of budgeting that has helped us keep our finances organized. When we got married, we were in a pretty tight spot financially and there wasn’t really any room in the budget to pay for budgeting software.
Running a financial blog I hear about all the most popular budgeting tools out there (YNAB and Mvelopes) all the time, so while my ING system of budgeting was free, I knew that using some dedicated software could make our budgeting easier and probably more effective as well. So, two months ago we decided to test out Mvelopes to see how we like it.
How Mvelopes Works
First I should mention that Mvelopes isn’t downloadable financial software, rather it is an online tool. The advantage here is that you can access your information from anywhere. You aren’t limited to do your budgeting on a single computer.
As the name suggests, it is a virtual envelope system of budgeting. So just as the envelope system has you use envelopes as your budgeting categories – Mvelopes works the same way.
If you look closely in the image above you can see the envelopes listed on the left hand side of the screen. These are the envelopes that you fill up with money at the beginning of the month. So, say you have $1000 of income each month – when you get paid, you divide those funds into your 10 (as few or as many as you’d like) envelopes. $100 for giving, $100 for groceries, $100 for gas, etc…
I should step back and mention that Mvelopes is synced with your bank account, so as you make purchases with your debit card, they appear on the right hand side (of the screenshot above).
So on the right hand side you will see a $40 transaction for the grocery store. Now you can just drag the $40 grocery transaction to the Grocery envelope and it will automatically reduce your $100 that you had in the envelope down to $60. The whole process can seem a little confusing, but once you see it in action it all makes sense.
Pros and Cons
We have now been using it for almost two months and I must say, it is a much simpler process that actually is saving me quite a bit of time over my ING budgeting method. I really think this is a great tool for budgeting. Personally I don’t know if I would have the patience to deal with a traditional envelope system of budgeting, but using something like Mvelopes makes it a lot easier and realistic.
There are a couple kinks that I would like to see worked out…
I am not sure if this is on the bank end or on Mvelopes, but my debit card transactions take a couple days to show up. It’s not that big of a deal, but just a little annoying at times.
I think the user interface could use a makeover. The tool is very powerful and offers a lot of great features, but they could take some lessons from Apple on their navigation to make the user experience a little bit better.
For another Mvelopes Review check out Jason’s write up: Mvelopes Personal Review.
The Cost
While I am very happy with Mvelopes and acknowledge that it has saved me time and simplified my budgeting, I wish it was a little cheaper. Currently it is a subscription-based service charging anywhere from $7-$12/month depending on how long you sign up. For what I’ve gained from using it I think it is worth the price, but I know that some people will have a difficult time justifying the cost.
For a cheaper alternative (over the long-term), you might want to check out YNAB. It is now the budgeting tool that I am currently using (as of 10/01/10) and has served us a little better than Mvelopes.
What do you think? Have you tried Mvelopes? Do you have another budgeting tool you love?
{ 23 comments… read them below or add one }
I had never thought before to use a budgeting software- I’ve always been a bit prideful when it comes to finances because I have a pretty good head on my shoulders and phenomenal self control. However I know this is not something I should rely on. I think I will suggest a tool like this to my husband and see if he is up to giving it a try. Thanks for the idea…
(Oh I was wondering if you had ever reviewed online savings accounts, specifically the ING Orange accounts? My husband and I are really interested in something like this, but we aren’t really sure what to choose, or how to go about it. If you don’t have any reviews for it, would you consider reviewing it, or know of a blog/site that has?)
Shirley
Bob, glad to hear you’re giving Mvelopes a try. I’ve been using it for a few years now and love it. I first learned about it through Crown Financial Ministries who is also an advocate of the software. If you’re striving to budget and track spending well each month, I couldn’t imagine using anything else. A solid tool for the financial steward!
Good review. I have considered Mvelopes for a long time, but as you said the money has turned me off. I may have to check out NeoBudget. If it can come close to Mvelopes for $2.50 I could handle that.
Bob:
It may be a good tool but what benefit does it provide that would justify the monthly subscription that your time-tested and free ING method does not? Would you say and, more important, can you demonstrate that you are getting more than $7-12 of benefit.
I use MINT in conjunction with ING and am very happy. I see no reason to change. Same benefits, lower price.
@shirley – not exactly a review of ING, but close… http://www.christianpf.com/10-reasons-why-i-love-ing-direct/
@Geekmeister – don’t get me wrong, I still really like the ING method and recommend it. But after using Mvelopes for almost 2 months, I can definitely say that it is saving me at least an hour per month when it comes to budgeting. It also just makes the whole process a little simpler. I think it depends for each person and how elaborate of a budget they have set up – but for us just being able to drag our transactions into envelopes (via Mvelopes software) rather than making a transfer from one acct to another for each transaction with ING has just saved a lot of time. Mvelopes also seems to allow us to stick to a little tighter budget with fewer things falling through the cracks as well. I don’t know if it would have been worth it for us 4 years ago, but at this point the time-saving and it making my life simpler is worth $7 and even $12/month.
I just use ING and have played around with Mint. This does seem like a good idea, but I like to take cash out at the grocery store period so I don’t over spend. I’m not sure that this would help curb that habit that I have, lol. I’m still curious to see more advantages about the Mvelopes.
I just started playing around with Neobudget and so far it looks pretty good for just 2.50. I really like that they give you a 7 day trial without having to give a debit card or anything. I hate the things that give you a trial but are autorenew and you have to opt-out if you don’t want it. Opt-in after the trial is a win. I’ll have to do a review after I use it for a month or so.
This sounds like a great idea, but what happened to good-ol Mint? Has it fallen out of favor or did you get a free evaluation copy of this Mvelopes thing? It is really odd, Bob, that you will be writing about how you use paid-for budgeting software when free alternatives are as good. Honestly I am begining to wonder why.
Mcneri,
1. I have never been a regular user of mint. I like it, it is a cool tool, but it is not a budgeting tool – more of an all-encompassing personal finance software. Not what I am looking for at this point
2. I didn’t get a free copy, I am paying for Mvelopes just like everyone else. Every time I am given a free copy of something, I make it very clear that I was given the product to try
3. Like I mentioned Neobudget is a much cheaper alternative to Mvelopes – if you find something free that is just as good I’d love to hear about it…
I use pencil and paper. Can’t beat the price
I tried about 3-4 different budgeting tools before Mvelopes. I’ll never go back. Being able to “see” our money being allocated to envelopes, so that the money is set aside and reserved for its specific use, is priceless. I agree, the price is high. But with the hundreds of dollars we’ve saved in overdraft “protection” fees and credit card interest, it has paid for itself time and time again. They offer a lifetime membership, which we bought after 3 years. Now, the longer I use it, the better the price I paid. I”ve heard that Mint is good (and free). I’ve never tried it, but if it is envelope-based budgeting, give it a try. In my mind, there is no better method to budget than with envelopes. And paper envelopes in this electronic age just doesn’t cut it.
I use a written budget in a loose leaf binder. I admit it, I am a totally cheap non geek. For things like food and stamps we use cash, in, you guessed it, physical recycled envelopes. Other money goes into the bank. If DH were doing it I’m sure he’d go the technology route.
Mvelopes is the tool that introduced me to and got me familiar with the envelope budgeting process. Although I now use a simple spreadsheet, it was Mvelopes that taught me the habits of envelope budgeting and turned around how we manage our money.
One of the main reasons was how simple it was to use.
For that fundamental change in money management, the $15 monthly fee was worth every penny and more.
I use mint.com for free and can do the same thing. I create a budget category for each monthly item (groceries, household, baby supplies, etc.), tell it each month how much I’m willing to spend in that category, and then as the transactions post, I just have to make sure and assign the correct category to them and it will automatically deduct it from that category. You can easily see your “envelopes” on the first page of the program. And once again, best of all, it’s FREE! The cost is the only reason I’ve never bothered with Mvelopes.
It sounds like a really easy system to use. I can see a lot of time saved by just dragging transactions into the envelopes. My only concern is when you purchase items from multiple envelopes on the same transaction is there a way to itemize them before moving them to the envelopes?
@Drew
yep, you can split the transactions into various envelopes
I’ve used Mvelopes for 3 years now and have liked that the “perks” don’t cost more than the basic membership: perks like bill-pay, syncing with numerous accounts, smart phone alerts, etc.
I particularly like that some expenses can automatically come out of certain envelopes and that if you overspend, you are asked to take money out of another envelope to compensate. I also REALLY like that it will automatically distribute my money every paycheck into my budgeted envelopes. I’ve been very pleased with it.
I have been using quicken for years to track expenses. The software has a budget module, as you can set the amount you want to spend each month in a particular category, such as gas. When you category each expendature, either a debit card or credit card it will update the monthly budget totals.
I was wondering if somebody comments how this is different than the software mentioned above?
I think the biggest difference between Mvelopes and Quicken/Money is that they track expenses after you’ve spent it. With mvelopes, you can’t overspend without KNOWING because the system forces you to take the money from somewhere else or alerts you that are in the red.
Mvelopes has actually got us thinking about spending before- instead of sitting down at the end of the month asking ourselves how we have no money. Now we know ahead of time.
We’ve only used the system for a few weeks but it is completely worth it. Also, it offers a debt center that allows you to set up a repayment plan to eliminate all of your debt.
Lastly the best feature of mvelopes is the money for credit card feature. Since we have balances on our cards- but are committed to not creating more debt- this is awesome. If we go to the store and use our credit card for gas (for rewards points), Mvelopes takes the money from our checking account and puts in “money for credit card” envelope. When it is time to pay the bill we add that envelope amount to our regular monthly payment and that way we aren’t adding to our debt. That feature alone is worth the price to me.
I love mvelopes and the fee to me is worth the peace of mind, less fighting over money, and having a plan to eliminate debt.
I find it really curious that so many people consider $7-12 month to be a deal buster when it comes to budgeting help. My gosh, it’s not even one Starbucks Frapawhatever a week! Mvelopes is an amazing program, something that my wife and I embrace to help identify where our money is going ahead of time, not at the end of the month. I will bet my Frapawhatever that every one after using Mvelopes will save more than double the price of the subscription every month. Actually, I did by not buying Frapawhatevers because they were bad for my health and cost way too much. I’d rather put that money towards other things in life that are important and help us acheive our financial goals. Just so you know, I’ve tried Mint (does not have the funtionality of Mvelopes), tracking with a spreadsheet (gets old really fast) and doing nothing at all (freefall into debt)…your choice! Just get off the “too expensive” argument… how much do you pay for TurboTax each year? Why, because it works and it’s easy! Sure you can buy some pencils and get the forms at the IRS office (now wouldn’t that be fun)!
I love Mvelopes (I use Crown Mvelopes). I have been using it for about 3 years now and it’s definitely been worth the cost for me. I cannot imagine giving it up at this point as it saves me a ton of time and money. I have not had an overdraft fee since I signed up, and before that, I had overdraft fees once every few months or so from getting behind with keeping the budget up and life just getting in the way. Now I never seem to have concerns regarding whether or not money will be there to pay the bills or for discretionary spending. We are way ahead of the game. I have things so nicely budgeted out that we have more money every month and I really don’t know why. Nor do I care to know
Instead of in the past when the money was gone before I thought it would be, now it’s there and I am even able to cover unexpected expenses when they crop up. It’s worth every penny to me. I only signed up for it when I got desperate for a solution and I would say that it took me “hitting bottom” before I’d admit maybe I needed some professional help. I’d consider mvelopes the closest thing to a professional for me. My only regret is that I waited several years after hearing about it because I was detered by the cost and figured I could just do it myself….which I guess I still do, technically…but I think you know what I mean 
I was NOT so happy with mvelopes. In order to use the free trial you must sign up using a credit card – which I did. I decided during the trial that the system was not for me, based on the multiple duplicates the system pushed out. Anyhow, I tried to call and cancel. However, YOU CANNOT CALL THEM! When you do you are given a prerecorded message to go online. I did and I did an online chat with a rep and got a confirmation #. However I noticed my credit card was charged. I again did an online chat (this time the person was playing games with me). She eventually gave me a second confirmation #. Still on my credit card. I sent an email to dispute resolution and was told that it takes 4-6 weeks to get a refund. In the meantime I had to either pay my credit card with this charge one it or get a finance charge. Mvelopes is a TOTAL SCAM!
I began using the paper and pencil version of Mvelopes with Larry Burkett’s Financial Planning Workbook 20 years ago! Several years ago my husband wanted me to get out of the dark ages and try budgeting on the computer. I used Quicken for a couple of years but was very frustrated with it because it definitely was not a budgeting tool. When I went back to Crown’s website to see if they had something better to offer, I discovered Mvelopes! I have been using it now for probably 6 or 7 years or more and cannot imagine using anything else. I set my teenage son up on Mint (since it was free) but quickly discovered it fell far short of my Mvelopes.
It is definitely NOT a scam. Sorry the above person had issues, but generally their online chat customer service has been very good.
I, too, was able to get in on their offer a few years back of paying a lifetime membership, after being on the 2 year plan for awhile. Mvelopes keeps me sane and is a fantastic budgeting tool! I cannot say enough good things about it and I recommend it often.