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Envelope system?
- Thread starter Sammy
- Start date
Its really not his system, people were using it long before him. Nothing he does is really all that original, just tried and true techniques for managing debt.
Basically with the system you convert most of your bill paying into cash. Cash helps you to avoid overspending, since you're locked into each amount. You first must write a solid budget you can stick by.
After you the budget, use it for a couple of months and adjust as needed. Now you have an idea of your spending.
When you get paid, write yourself a check for each item in your budget which you can pay with cash. For instance, groceries, dining, clothing and fuel. It needs to be a check for each, so you can better track it. Cash each check and put the money in envelopes, one envelope per budget category. Then pay each bill from it's envelope.
You cannot transfer money from one envelope to another, this is cheating. Its all about learning to live with a budget. If you allocate $600 per month for groceries, and you're $50 short then you need to put some of the items back on the shelf and buy something cheaper.
Any left over money at the end of the money you can put towards paying off debt or building a savings account for emergencies.
Basically with the system you convert most of your bill paying into cash. Cash helps you to avoid overspending, since you're locked into each amount. You first must write a solid budget you can stick by.
After you the budget, use it for a couple of months and adjust as needed. Now you have an idea of your spending.
When you get paid, write yourself a check for each item in your budget which you can pay with cash. For instance, groceries, dining, clothing and fuel. It needs to be a check for each, so you can better track it. Cash each check and put the money in envelopes, one envelope per budget category. Then pay each bill from it's envelope.
You cannot transfer money from one envelope to another, this is cheating. Its all about learning to live with a budget. If you allocate $600 per month for groceries, and you're $50 short then you need to put some of the items back on the shelf and buy something cheaper.
Any left over money at the end of the money you can put towards paying off debt or building a savings account for emergencies.
Penny Pincher
New member
Excellent write-up Flint! The only thing I can add to that is that we also set aside envelopes for our weekly allowances.