How To Make A Envelope Budgeting System
If you have been with A Mitten Full Of Savings lately, you know that we are doing the 52 week money saving challenge. I thought I should tell you about a way you can do some more budgeting and it is the Envelope budgeting way.
How to do Envelope Budgeting:
Envelope Budgeting is a simple concept that may help you save money easier and make sure it goes where it should for bills and expenses. The idea is not a new one, and has been used way before there were even checking accounts. It is a perfect budgeting plan if you are a very visual and tangible person when it comes to money. It allows you to only use what you have any not spend over.
The basic idea is you decide what you have to spend on bills, expenses and savings using cash. You don’t use electronic forms of payment as they are easier to loose track of. With cash, you can see it, count it and hold it so you know in concrete terms exactly how much you have. You place your cash in separate envelopes according to what you have set aside and you pay your bills, buy your household needs and save money.
For instance, you would put your rent/mortgage payment in one envelope, your cable money in another and your car payment in a third. Obviously, this is much more simplified than most people’s bills, but you get the basic idea. With what you have left, you further divide it. Here are some ways you could divide the leftover cash into separate envelopes:
- Gas for your vehicles
- Household items like toilet paper
When it comes time to go grocery shopping, you only take the grocery envelope with you so you know exactly how much you have to spend.
You will also need an envelope for savings. After all, this is a way to help you save money, right? If it helps you to not touch it, make your bank account and a deposit of the money in this category your “envelope”.
Stop writing checks. Stop using credit cards and ATM cards. Only spend the cash you have.
Not only will this help you see concretely where your money is going, but you will also probably find that you are saving yourself from fees associated with electronic money accounts such as ATM fees. You will also see where you have been wasting money on things such as eating out or that impulse buy of a candy bar at the gas station. If you are putting yourself on a strict budget, you will probably be surprised where your money gets eaten up. This budget plan is good for anyone on any financial arena.
Do you plan on doing Envelope Budgeting or have you done it in the past? Let me know your thoughts!