The envelope budget

Budgeting can be very difficult. With one swipe of a credit card you can buy now and pay later for virtually anything. With this type of mindset it is hard to budget for expenses. The envelope method of budgeting makes keeping a budget a lot easier and will prevent you from spending beyond your means.

Start by figuring out how much you spend on each category of your budget. Food, utilities, clothing, luxuries etc. For each category you should then obtain an envelope and write the name of the category on the outside. At the beginning of each month, place the appropriate amount of CASH in the envelope.

You are to spend only the amount that you place in your envelope. This will help you visualize the amount of money you need through the month and how much you are actually spending. You will not realize how much the grocery costs you until you start paying with cash rather than a swipe of the card. Handing over a stack of $20 bills can be a bit demoralizing at first, but it is for the greater good.

The envelope system works because you only spend what you have. You cannot reach into the bottom of the envelope and find more money, nor can you borrow from other envelopes because chances are that they are running low as well. For people who cannot stick to their own written budget, it is a lot easier to follow through with the envelope budget. You will quickly forget about your savings accounts and how much you are actually saving by keeping money in itemized envelopes. When you have only $50 allocated to spend on eating dinner out, you will make it will make your decision, and quite possibly the overall enjoyment of that dinner, much more valuable to you. The key is to stick to the system and only use each envelope for its intended use.

You will find that the envelope system really helps you visualize your budget as dollar bills rather than payments that need to be made. Give it a try.