The Envelope System of Budgeting
We have previously discussed various ways to budgeting. [See video below].
Here, we make an attempt to discuss one of the more hideous methods of budgeting. The Envelope System is a unique system of budgeting whereby you label envelopes according to their respective expenses. Each envelope is filled with the requisite amount of funds necessary for the expense.
Utilizing the envelope system can be a great way to stay within your budget. It can easily be combined with other methods or as a standalone. Particularly, if you deal with cash mostly.
You have to decide which expenditure categories you want to control using the envelope system. In general, any area where you overspend is good to use. For so many people, this could be food, clothing, and entertainment. You simply get the cash necessary for your budget — no more, no less. Envelope each and label them with dates.
Budgeting Methods : https://youtu.be/7QLiydNGFGw
Get your envelope and pen, then write the name of the category on the front of the envelope and put the funds inside. Going forward, anytime you need money for that category within the budgetary period, you simply go to the envelope for it. You will readjust — check how much is left or how much you were off by. If there is a need to increase or reduce that amount, you will do that at the very end of the budgetary period — usually at the end of the month. If you spend more, then it means you need to evaluate what you have spent in the previous month. If you spend less, then you need to keep it up by ensuring you keep spending less.
Also, you need to be thrifty. Example is clothes. Summer wear is usually cheaper in other seasons than summer itself. Also, you can stock up on summer clothings at the very end of summer when stores will have most clothings in their layaway section. Same for winter. You just need to gauge when items are much cheaper. Electronics, Cars,etc.
One good thing about the envelope method is that you can budget and save for future items as well.
The true feeling of achievement is when you open an envelope for a category and find out you still have enough funds.
Budgeting Methods : https://youtu.be/7QLiydNGFGw
