Envelope Budgeting

Sometimes we get so used to swiping our credit cards that we forget what it is like to spend actual money, and how much it suck to see real money leave your hand.  People try to cut down costs by budgeting, but a mindless excel spreadsheet isn’t always enough to get the point across.  For those people who want to budget their money, but can’t seem to follow a written budget, then you need an envelope budget, but be forewarned, envelope budgeting is not for sallies

What is it?

The envelope budgeting system is a way to physically separate your money into different categories, so that you can budget and see the visual effects of your spending.  You literally put the money that you make and put it into several envelope categories, and that is all you have to spend on that specific category.  Sure, it may be primitive, but there’s no denying that it works!

How To Do It

Calculate all of your expenses

Take past bills, figure out what you are paying on each bill, and put all of those concrete expenses into their envelopes.  Figure out about how much it costs to buy groceries each week and put that into one envelope.  You may figure out how much gas it takes to commute to work and put that into another envelope, and so on.  Whatever is left goes into a misc. spending envelope.

How it works

Each week pay your bills and do all of your expenses directly out of your envelopes, and do not use a credit card.  If you go over in an envelope, groceries for example, then you must take that money and transfer it into your envelope from your misc. spending envelope.  This will teach you that if you overspend in one category you have less fun money to spend shopping for shoes and such.

Make it livable

Nobody wants to follow a budget that you have 5 dollars a week to just spend, that is no fun.  Better yet, you can’t live on $10 a week for groceries, so make sure you adjust your funds to fit your lifestyle.  If you don’t enjoy eating out, but you like to go shopping, then buy all of your groceries to save on that envelope, then you can have more money to put into your misc. spending envelope.  Have fun with it and adjust it as you need to in order to keep to your budget.

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