While there are loads of apps and other technologically advanced ways to budget, one of the best ways to actually stick to a budget is using a method that’s been around for decades: the envelope system.
Make this a part of your money routine, and your grandmother will be beyond proud.
What is the Envelope System?
The envelope system has you divide your budget into categories. The money that is allocated to those categories is then kept in cash in separate envelopes. Want to know how much money you have left for the week to spend on food, or entertainment? Simply peek into the envelope, and see what you’ve got to work with.
How to make the Envelope System work for you
Start the envelope system by creating a budget for yourself for the month, dividing it into categories like groceries, going out, transportation, and miscellenious (categories that makes sense for you).
Now, let’s say you budgeted $300 per month for groceries. When you get your first paycheck of the month, put $150 in cash into the envelope marked “groceries.” Do the same thing for the rest of your categories.
Here is the key: whatever you do, don’t take cash for groceries out of any envelope except the groceries envelope. No matter what. When your money is gone from that envelope, it is gone.
They key is not cheating
It might feel really tempting to start borrowing money from other envelopes, but that is precisely how people get into budgeting trouble. The purpose is to make you stick to a budget and to learn to live within your means. When your restaurant money runs dry, just don’t eat out. If your transportation money disappears, ask friends for rides until your next paycheck arrives. If you find yourself struggling a bit in the beginning, just know, it will get easier as you get more used to the system.
Treat yo self
There will be no better feeling than getting to the end of the month and finding you have some money leftover in some of the envelopes. You have two choices: sock that money away or treat yourself! We are fans of both options, especially because sticking to a budget doesn’t have to mean depriving yourself, it just means spending responsibly.
Feature Image: Pixabay
Found this Helpful? Why Not Share?
We have a small favor to ask…
The WOT is an online reputation service, that provides crowdsourced reviews of websites.
While The Money Manual is a new site, because of the website’s previous owners, we have a low WOT score.
We are asking our readers to share their honest feedback for how we are doing by heading to WOT and rating The Money Manual. It will only take a minute, we promise. Thank you!