The Amazing Envelope Budgeting Trick

Try budgeting by using envelopes. It’s so easy peasy, and it works. Stop the worrying about all the things you want to purchase for big kids and baby, and set into motion a system that will plan out your money and make it stretch.

Managing your personal finances gets complicated fast, but budgeting by using envelopes can take the pain out of the process and make things easy to follow. Let’s say you want to plan for some health and fitness equipment, you just add an envelope for that expense.

Your first step is to put together a spending plan, or budget, to represent your planned spending over the next few months. This is a good practice to have in order to keep good control of your money. When you have the spending plan drawn up, you can begin to see where your money goes each month. You will have your income, your expenses and the surplus at the end of each month.

Once you have this completed, you are ready to use the envelope system. For those important categories of spending, especially the ones that tend to runaway from you  you will want to have a simple envelope to keep your cash inside. Use one envelope for each category.

The advantage of the envelope system is that you allocate a set amount of spending to each major category. Once you discover that an envelope contains no more cash, then you can spend no more money. This stops your spending getting out of control. If you do want to spend more one month on clothes, for example, you always have the option to decide to spend less in another category, and you can move some money between the envelopes. This keeps some control but allows for the flexibility needed in real life.

Budgeting by using envelopes can often beat sophisticated computer spreadsheets because it keeps things simple and has a build-in control to stop overspending. Why not try it today? Once you get the budget under control, being able to retire early is within your reach.

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