The Envelope System

One of the keys to successful budgeting is sticking to the ammounts you budgeted (duh). Unfortunately this is easier said then done for most people. These days there are a multitude of websites, apps, and gadgets to track your spending and keep you organized. When it comes to results however, you just can’t beat the tried and true envelope system! Here’s how it works:

Make your budget: Spend all of your money on paper on purpose at the beginning of the month.

Stuff the Envelopes: Fund categories as many categories as practically possible with CASH. Withdraw the amount of money budgeted for those categories and put it in envelopes with the proper label. You won’t be able to use cash to pay your electric bill (for example) so use your best judgement when choosing what gets the cash treatment. The categories I use this system for are: Food, Groceries, Gas, Entertainment, Clothes, and Misc (Blow).

Stick to your guns: ONLY spend money for these categories out of the proper envelope. When the envelope is empty, STOP SPENDING!

Practice, Practice, Practice: It will take a few months for this system to start working well for you. Be patient, adjust, and just keep thinking about being free from debt!

So there you have it, a simple solution to the age old problem of blowing your budget. Using this system will not only help you stay on budget each month, but by using cash you will dramatically change your attitude toward spending and money. You’ll suddenly begin to realize just how much “fries and a drink with that” costs. Making this emotional connection with spending will develop your awareness of money and put you back in the driver seat of your cash flow.

Check out my other articles to help with your budgeting!

Related posts:

1. My Digital Envelope System
2. 6 Tips to Make Your Budget Work
3. My PayPal Digital Envelope
4. How Technology Undermines Your Budgets Success
5. The Five Ws of Budgets