How Do You Budget With The Envelope System?
The envelope system of budgeting is where you divide your expenses into categories and “fund” those categories monthly, or when you receive your paychecks. As you spend, you deduct your expenses from the corresponding envelope. It can be done by putting cash in envelopes, but now most people do it by setting up a spreadsheet on their computer, using an online program such a Mvelopes, or by pen and paper. Determine your required monthly expenses, which are ones that you make payments on every month, and the amount is usually fixed. Some of these would be your mortgage/rent, utilities, car payment and insurance. For bills that fluctuate, like utilities, figure the average monthly cost based on a year’s worth of bills. That’s the amount you will fund that envelope with monthly, whether you use it all that month or not, as you will be saving the rest for a month when the bill is higher than the monthly amount you budget for that category. Account for your discretionary spending, which are
