The Envelope System is a simple and flexible way to keep control of your monthly budget and ensure you don’t over spend. Here’s how it works.
Buy a pack of plain envelopes, big enough to hold dollar bills.
Next get a pad and write down all the expense categories you can control like Household Expenses, Groceries, Gas, Clothes, Vacation
Fund, etc. Don’t include expenses you can’t control like utilities insurances and loans.
Now label each envelope with an expense item. Next decide how much money you want to put in each next payday.
If you don’t use all the money from an envelope in a month add the saving to next month, or better still, transfer it to an emergency
Review your envelope system regularly, as you may discover you need a little bit more or less in a category, or maybe to add an additional category.
Running the envelope system will benefit you in two ways.
1. It will help you keep track of just where your money is being spent.
2. It will stop you from overspending your budget- an empty envelope means no more money for that category.