Envelope Budgeting Resources

I’m sure the majority of you are familiar with envelope budgeting, where you pull aside cash for various budget categories and keep an envelope for each. Fiscal Geek has a great description, basic how-to’s and commentary on how the system worked for him and his wife. If you’re opposed to carrying around cash, here is an interesting idea for using prepaid gift cards, instead. Dave Ramsay has a fancy-schmancy envelope system that comes in a nice case. It’s $19.95, but might be worth the investment, especially if you like things all neat and tidy (and a great system will help keep you motivated). And, for those of you who don’t get our weekly newsletter, you missed these free envelope template and tutorial from from Kelleigh Ratzlaff Designs. These are beautiful and would be so fun to use.

Now, I already told you that I try and use my credit card as much as possible to get the rewards points, but I still manage to use a virtual version of the envelope system. I use YNAB (You Need A Budget) software and love it. It is a bit more work in that you need to enter all your checks and card charges, but it works for me. Each month I budget the amount I have to spend in each category (envelope) and distribute my income accordingly. The great thing is that each credit card charge is deducted from my envelop as I enter it and not when I pay the bill at the end of the month. This gives me a more true picture of how much money I actually have available.This program also builds in a one month cushion if you use it correctly. You slowly build up a “buffer”, at which point  the money you make in January, is not budgeted until February. And, since I  set aside funds in envelopes for upcoming expenses, that estimated tax payment or dental bill no longer hurts when I write the check. I’ve already budgeted for it and the money is there!

I tested several trial programs before deciding YNAB was the one for me. Another popular program is Mvelopes.com, which also has a free trial. PearBudget is also very popular and offers a 30 day free trial ($3/month thereafter).  If you have Excel, you can download this free program. Simply trying one of these programs for 30 days, might be an eye-opening endeavor if you haven’t tried it before.

The envelope budgeting method helps you:

• Spend only what you have
• Choose your priorities (if you overspend in one category, you must take from another)
• Stay out of debt
• Easily assess your spending habits

Do you or have you used the envelope system? Do you have any tips or tricks? What is your favorite system? Simple or high-tech?

Continue reading Envelope Budgeting Resources …

From Econobusters.