Lanny Saving Money

Saving money tips, budgeting and building wealth

HOW TO CREATE ENVELOPE SYSTEM BUDGET

If you’ve heard about the envelope system for budgeting and want to give it a try, here’s a simple step-by-step guide to help you get started. The envelope system is also known as cash stuffing or the envelope method. It involves allocating your income into designated envelopes for specific spending categories. This helps you keep track of your money and stay within your budget limits. 

Here are the steps:

1. SET A REALISTIC BUDGET

List down all of your essential expenses such as housing and utilities, food, transportation costs, debt payments etc., then add up their total cost. This will be your target figure when budgeting with the envelope system. 

2. IDENTIFY YOUR ENVELOPE CATEGORIES

Choose which spending categories you want to assign envelopes for. This could be for groceries, entertainment, clothing etc. It’s important to make sure the number of envelope categories matches up with your budget goals and necessary expenses. 

3. FILL UP THE ENVELOPES

Once you’ve identified your envelope categories, calculate how much money is allocated for each one and stuff the cash into its designated envelope accordingly. Make sure you only allocate cash that is within your budget limit so as not to overspend. 

4. TRACK YOUR SPENDING

As you use cash from the envelopes, keep track of it in a spreadsheet or financial app. This will help you stay on top of where your money is going and adjust your budget accordingly if necessary. 

5. RE-EVALUATE

Regularly review your envelopes and spending habits to ensure you’re staying on track with your budget goals. This will also help you uncover any areas where you can save more money and make needed adjustments. 

Using the envelope system for budgeting is a great way to stay organized when it comes to managing your finances. With just a few simple steps, you can set yourself up for success in reaching your financial goals!