What is Digital Envelope System?


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A Digital Envelope System is a process to keep a record that what budget we have for the month in each class. So your money is categorized in envelopes for each category. So if you need to pay those expenses at the end of the month, then you can take the specific envelope of the class and pay for the required category.

A digital envelope can protect your finance or data with more security and authenticity. it is an online holder that holds your data digitally. A digital Envelope is end-to-end encrypted and provides you the best privacy, and limits your data to have a loss of data.

How Digital Envelope System Works?

Digital Envelope System is like a secure holder that holds your data which uses end-to-end encrypted security to secure your data.

  • The First step to encrypt your data is to decode the data
  • Then encrypt the generated key by public-key encryption. The developed vital length is from 32 bits to 448 bits to make it intensely private.
  • Next, Blowfish is an algorithm to encrypt the key and the data. This is an unbound algorithm that can be used by any user. This is free to use.
  • Blowfish can accept any length key. The critical length can go beyond 448 bits. Blowfish is a free-length key block cryptograph.
  • Blowfish obtain the encrypted access, and then the key is integrated with the cryptography, and finally, it is ready to have a secure data interchange.

How does the Digital Envelope System Work for Us?

Digital Envelope Systems work as a game-changer for us. It has been an excellent chance for us psychologically. Our brain has perfect control over how we think and act accordingly. Spending physical money has been a big deal for all.

To spend money physically and to spend it digitally has been a lot different from one another. This is just a game of mind. Your mind does not compute the things that are not physically present.

How does the Digital Envelope System Work for Us

The decrement in your cash physically when you hand it over to others and not getting it back, and when you pay digitally through your card and bring it back is different.

You have a feeling of getting our thing back is satisfactory, and you can move to the next stop for shopping happily. Psychological satisfaction is essential. And a sense of having a safe transaction and having no fear of getting snatched is very satisfying.

If there is a digital system for your envelopes, you can have a record of your expenditures and everything. You can maintain it more feasibly.

Steps to Build Digital Envelope System

1) Create your Budget

Create a list of your monthly expenses and your budget. Manage your costs according to your budget. The list of the envelope systems comes from the budget you make for your costs.

2) Transfer Money to your Budget Account

Once you have listed your budgeting and create envelopes, you have to transfer the desired amount to your account to fulfill your expenditures.

3) Add Classes to your Digital Envelope System

After adding finance to your account, you should add your classes to the system. You should have listed your expenses and needs and create classes of your needs accordingly.

4)  Keep a Record of Your Expenditure

With this system, you can track your expenses digitally. You can have a record of your spending for the whole month. And you have the list of necessary and unnecessary expenditures.

How to Manage your Budget Digitally?

Managing your budget is not that easy. The digital envelope system has made things more convenient for us. Now you can digitalize your currency and the list so that the chance of loss of data is less. And you can update your list can view your expenses anytime, anywhere. You can have a detailed record of your expenditure.

Checking Account Classes

To maintain your digital envelope system, you need to check your account classes. You don’t need to have a different envelope for every single expenditure. You can have an overall look at the classes and categorized them comprehensively.

For example, mainly, we have three categories that can be linked to their subcategories. These three categories are:

  1. General Account
  2. Nourishment Account
  3. Individual Expenditure Account

How to Manage your Budget Digitally


How General Account can be linked to Digital Envelope System?

In the General account, we can have different categories like rentals, internet bills, electricity bills, study expenses, etc. This account holds the main costs of a family. You can record your general monthly payments and can calculate the annual basic needs.

How Nourishment Account can be linked to Digital Envelope System?

In this category, you can use a nourishment account for all kinds of food items. All types of spending on food will be paid for by this account. This includes your grocery, restaurants, and any roadside refreshments. By this, at the end of the month, you can have a list of items and your expenditure that you spend on food.

How Individual Expenditure Account can be linked to Digital Envelope System?

This envelope is used to calculate the cash that you spend individually. This envelope is for every individual in a family. So that they can calculate individual spending on a single person, this expenditure includes their medication, salon things, movies, outings, and everything else that is being paid by other accounts.

It’s easy to have a budget system, and after spending on basic needs, you can divide the money individually for their spending. So, it is their choice to either pay or saves.

Why Digital Envelope System Admired by the Human Race?

People cherish this digital system because people can maintain their expenses even if they don’t have the money. However, it is challenging to choose a specific envelope for different costs. But with the digital envelope system, it becomes easy for you to spend the funds digitally for a particular category. It is best for the purpose if you want to shop online.

This helps you a lot to keep an eye on your daily expenses. You can save a check on your spending as well. This includes every kind of spending you do in your daily routine. You don’t have to pen down your expenses physically. To sum up, there is a digital track record of the spending you made.

Benefits of Digital Envelope System

It is Secure

Firstly, there is no risk factor of any loss. You have secure transactions. So, you did need to pay anything for opening a digital account. Now, you have a safe record of your transactions.

You can Shop Effortlessly

Secondly, with this digital system, you can shop at your homes. You can see the things online and buy them online and can pay for them digitally. You don’t need to pay them cash. Just buy them online and have the goods at your doorstep.

No Stress of Carrying Cash

Thirdly, the public doesn’t feel safe to have cash in their pockets as roadside robbery has taken place in our environment. We feel unsafe carrying cash on our own. With the digital Envelope System, the risk of carrying money reduces.


Finally, the digital account is available all the time for spending. You can use that anytime, anywhere.

Drawbacks of Digital Envelope System

Carefree Spending

There is to say that spending money digitally is easy. You don’t see the reduction of your cash physically. Because of this, you can spend money before thinking. This would be challenging for the ones who think twice before spending their money.

Excess Spending

It would be easy to make money from one account and spend it for other purposes. You can also get out of the budget due to your overspending. Excess of anything is wrong. Therefore, excess spending can cause disbalance to your budgeting.

Card VS Cash

It is distressing to pay with a card rather than cash. Psychologically people spend more with the card than money because they don’t see cash running out of their hands physically.

Card VS Cash

Digital Envelope System and Customed Cash Envelope System

The Digital Envelope system is certainly different from the cash envelope system. With the customed cash envelope system, however, you make a specific envelope for each class.

Firstly, you have to carry all envelopes for another spending. Secondly, you have to pay in hand, and thirdly for the record of your expenses, you need to memorize them. And after that note, it to have a record at the end of the month.

The digital Envelope System made things easygoing for us. The stress of carrying cash is consequently a relief. Now you just need to bring a piece of plastic with you, and you can buy anything you want and likewise.

In short, you will pay for your basic needs, for your refreshments, and any Individual spending through that piece of plastic. The classes have been created on your account according to your budget automatically.

Above all keeping, a record of your spending has also become convenient for you. As you don’t need to memorize your spending and note it down on your own. Meanwhile, the Digital System will do that for you. Moreover, It will provide you a detailed record of your spending. You can see the results anytime, anywhere you want.

In conclusion, the Digital Envelope System has its benefits and drawbacks. But benefits of this system are way more than the cash envelope system. Most importantly, it depends on the person how well does it use.

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