An envelope budget system is definitely for you if you're the type who earns just enough to pay the bills and put food on the table. Taking control of the family's finances can be a real dilemma at times. You may have already heard about this technique before but didn't really know how it works. As the name implies, the envelope budget method involves putting money in envelopes which is allocated for each type of expense, from phone bills to car fuel expense and food budget to savings.
I started off using plastic kitchen containers with lids. I put labels on for what each one was for. Something you must do is have a "Play" one. Then once a month, whatever is in that jar, you just spend on yourself for a treat. No bills! Depending on how much you have in there, you can spend it on going to the movies, dinner out, new clothes, some sort of technical gadget you always wanted, a short holiday. The possibilities are endless but the main thing is that it is just for you to spend on yourself and enjoy. I made it to pay myself on the 1st of every month.
It makes it much easier and enjoyable to stick to a budget if you have fun.
Wondering how this could help? To begin with, you get the guarantee that all your monthly expenses are covered with the individual envelops in which you place the budget allocation. That alone can help a lot with your budgeting because you are absolutely sure that you have taken account of all the necessary expenses. Some of the amounts are easy to determine because the bills tell you the exact amount but other items like food and leisure may take more time to decide on.
You may also wonder if the envelope budget system can help you with your finances. It can actually help tremendously. As long as you stick to your budget plan, your expenses will always be covered. By spending only the certain amount allocated for a particular budget area, for instance groceries, you can avoid impulsive buying and you only buy the things that you need. You can also avoid purchasing more than what you actually need. This will also minimize the amount of food that will be thrown out because they have gone bad.
When you're using the envelope budget system, you can simply get the particular envelope for the bill you want to pay before you head out the door. So, the money for the other expenses will remain untouched until they're needed. Also, if you have another envelope where you place your budget for leisure activities, you have a way of telling whether you are putting away too much money for leisure or not. So if you think that you can reduce the money on this type of expense, you can simply take some of it and add it to your savings or contingency expense envelope.
But what about if you feel like you can't be trusted not to take money out of other envelopes for other purposes? You have a couple of choices. You can trust a friend or family member to hold your envelopes for you. That way you won't be tempted. Or you could pay your set bills as soon as you have the money in the envelope and leave the remaining envelopes for food, gas and leisure.
Budgeting doesn't really have to stress you out. All it takes is sensible planning and a strong will to adhere to your plan. And in this era where banking has also gone online, you have the option of using spreadsheet templates or software programs instead of physical envelopes.
You can use physical envelopes to budget your money or you can go "virtual" and use an online program. It will help you always know exactly how much you have left to spend, instantly know the impact of every spending decision, effectively manage credit card spending, and quickly create an easy to use household budgeting plan.
Let me know how the envelope budget system has worked for you and if you've found any other tips or strategies to make your budgeting easier.
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