Get Out Your Envelopes

What is an envelope system?


An envelope system is an simple way of making sure you don’t overspend what you have budgeted.

Once you’ve created a budget one of the best ways to stay on budget is to use the Envelope System.  Simply put, you take the cash you have budgeted for a particular category and you put it into an envelope.  When you purchase something in that category you use the money in that envelope,  and you only use that money for that particular category.  For example,  let’s say you’ve budgeting $100 for Entertainment for this pay period.  You get $100 in cash and put it in the envelope.  When you go to the movies or to the theater you take the envelope with you and you use that money.  When that money is gone you don’t go out again until your next payday and you play the next budgeted amount in that envelope.  You can pic what ever categories you want to use envelopes for.  Examples are Food, Entertainment, Groceries, Blow Money, etc….  Doing things this way you make sure you don’t accidentally spend your grocery money on a night at the movies and a dinner.

In these days of Internet banking and debit cards physical envelopes may not work for some people.  As an alternative there are virtual envelopes or electronic envelope systems that can help keep track of your envelopes.  One such service is called mvelopes.com (affiliate link). This service lets you create electronic envelops and put your budgeted amount into each envelope.  The problem I would have with this system is after you buy groceries you would have to log back into the service and remove or deduct that money from the grocery envelope.  I would have a tendency to forget to do this and my electronic envelopes would be all messed up.  However, those of you with the discipline and memory to make the deductions in the service will probably love the service.  I think it’s a great service for some.

No matter what system you use, you need to make a budget and only spend the amount that you have budgeted for each category. Do this and you are sure to Whip You Finances Into Shape.


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