The Envelope System

The envelope system is a budgeting system that helps people visualize, plan, and monitor their spending habits. Many financial planners and advisers recommend starting your envelope system by using only cash.

Keep Track of Spending

Swiping a debit or credit card makes it all too easy to lose track of your purchases and spending habits. Using tangible cash that you can hold and feel in your hand encourages the spender to think about whether or not they actually want to turn that money over to someone else and let it go.

Use Cash Envelopes for Payments

Mindless swiping makes the money appear imaginary and less real.
Create separate envelopes for the different categories of spending that you need to plan for. Some examples of the envelopes include:

Rent/Mortgage
Utilities
Groceries and supplies
Vehicle payments
Gas and vehicle maintenance
Children’s expenses and activities
Clothing
Personal care expenses
Insurance payments
Medical expenses
Entertainment

Fill each envelope with the appropriate amount of cash for your budget and expenses. The remaining cash leftover can be divided between payments towards creditors and savings. Once you have spent the allotted amount for that envelope, you can no longer spend in that category until the following month.

This method helps with personal discipline and creating an awareness of one’s habits. For more assistance with your fresh start, contact your Stockton bankruptcy attorney.