What is the Highlighter Method?

When it comes to budgeting, sometimes the simplest tools are the most powerful. That’s exactly what the Highlighter Method is all about. It’s a quick, visual way to track your spending, stay on top of your budget, and make sure your money is working the way you want it to. I talk about this exercise alot, this in fact is step 1 when first starting the cash envelope system. 

So what is it, and how does it work? Let’s break it down.

The Highlighter Method Explained

The Highlighter Method is a system where you use different colored highlighters to categorize and track your expenses. Instead of relying on complicated spreadsheets or digital apps, you can easily see your money habits on paper.

Here’s how it usually works:

1. Print Your Bank Statement (or Track on Paper) – Start with a list of your actual spending for the month.

2. Choose Your Colors – Assign each color to a specific category (for example: pink for groceries, green for bills, yellow for fun money, blue for savings, etc.).

3. Highlight Each Expense – Go through your statement and highlight every transaction based on its category.

4. Review Your Spending – At the end, you’ll see a clear picture of where your money went, what categories are taking up the most space, and where you might want to cut back.

Why It Works

• Visual Clarity – Sometimes numbers alone don’t tell the story. Colors make it obvious where your money is going.

• Easy to Start – All you need is a highlighter set and your budget or bank statement.

• Accountability – When you see a whole page filled with one color (like takeout or shopping), it’s a wake-up call.

• Motivation – Tracking visually makes saving and budgeting a little more fun—and that helps you stick with it.

Tips for Success

• Be consistent—do it weekly or monthly so you can stay on track.

• Use categories that fit your lifestyle, not just generic ones.

• Combine it with your budget planner or cash envelopes to create a full system.

The Highlighter Method is proof that budgeting doesn’t have to be complicated. With just a set of highlighters, you can uncover your spending patterns, make smarter money choices, and feel more in control.

So, grab those highlighters and start giving your budget some color—it might just be the easiest step you take toward reaching your financial goals! Check out my You Tube video here. Leave me a comment below what your thoughts were when you first did it. What did you think? 

Christina xo