prosperityseeker

I am a strong advocate of using cash to pay for everything. However, I know for a fact that many people just simply don’t have the time or the inclination to create a budget and live by it. Therefore, I would recommend for those of you who hate budgeting or simply want an easier way to manage your money to use the envelope system.

I first heard about the envelope system through Dave Ramsey and I have been using it ever since. Here’s how it works. You pay your monthly obligations (including your allocated debt payoff) and the money that is left over is then yours to spend. You then take separate envelopes and mark each with the appropriate category. For instance, you can have an Entertainment, Fun Money, Miscellaneous, Gifts, Car, Groceries, Personal Care Items, whatever envelope.

You then put the amount of cash that you plan to spend on each category in its respective envelope. Then, you only spend the money in that envelope for items in that category. For instance, if you go grocery shopping and buy $100.00 worth of groceries, you take the $100.00 out of the grocery envelope. The key to making this work is to not spend more than you have in the allocated envelope.  And, once the money is gone in that envelope, it is gone.

The envelope system forces you to be more responsible and is a great way to get ahead and budget your money without really budgeting. Now, how cool is that?

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