Managing Your Budget With the Envelope Budget System
Having trouble keeping your budget on track? Using the Envelope Budget System is the perfect solution!
The beauty of an Envelope budget system is it only allows you to spend the amount of money you have designated for that item. For example, if you only want to spend $600/year on clothing you put $50 aside each month into your ‘clothing’ envelope.
When you need/want a new pair of shoes you can only use money in that envelope. If the shoes you want shoes cost $40 and there is only $20 in your envelope, you have to wait until the next month to make your purchase. When trying to stick to a budget and all your money is in the same bank account, a little overspending can occur pretty easily, this budget system helps you organize your money and designate it to the areas that are important to you.
Here is how to get started:
- Create a budget planning for all expenses throughout the year. Don’t forget those periodic expenses like car repairs, home repairs, clothing and travel but also be sure you have money going aside for food (separate groceries from dining out), utilities, etc.
- Get some envelopes. I like those plastic coupon holders that already have the separate slots and tabs.
- Designate an envelope for each item and every paycheck put the budgeted amount of cash into that envelope. I leave my housing and insurance funds in my bank account because those consistently come out every month and the amounts are always the same.
- When shopping, stick to your designated envelope. Going grocery shopping? Only bring the grocery envelope into the store with you, no debit card, no credit cards and no checkbooks. It is going to be really hard to overspend if all you have is your budgeted amount of cash along.
If you are looking for an easy budget plan, try this system. It simplifies budgeting so you can spend less time worrying about your finances and more time enjoying your life. Give us a call at 888.577.2227 or learn more about our free and confidential services.
Leah Michaelis is a Certified Credit Counselor with LSS Financial Counseling.