The Envelope Method

The old "Envelope Method" has been a proven system to learn to save and budget your money for years. Millions of people have tried this flawless budgeting method with great success, and now you can too.

Here are the basic components of The Envelope Method:

1. Write down your expenses - Get yourself a piece of paper and a pen and write down each and every monthly bill that you have. Include all of your ulilities and even the cable bill, the cell phone bill, etc. Also write down your luxury expenses such as your childrens' dance lessons and your monthly trips to the nail salon. If you don't know exact amounts, just estimate. You probably have a ball park figure of what these things normally cost. Also make sure to include a list of food, gas, entertainment, and a miscellaneous category. The miscellaneous category is for those unexpected emergencies that come up from time to time. Just put a small amount in there at first and every month it will grow and will be there when you need it the most.

2. Create your envelopes - After you've finished making a list of expenses, get a business sized envelope for each bill and write the name of the expense on the outside.

3. Divide your bills into envelopes - When your check comes in, divy up the money into several the envelopes. Put in the money for the electric bill into the electric bill envelope, etc. Make sure you include enough for each bill. If you find out that you fall a little short from your original estimation, take the amount out of your "miscellaneous" envelope.

4. Do not spend the envelopes on anything but what they're designated for - If you are out of money in your "entertainment" envelope and you want to go to a movie, don't take it out of the miscellaneous envelope and think you'll just make it up later. Stay home! If you can't afford to go out, then don't go out. A big part of this system is your self restraint. Be sure to allot yourself some entertainment money each week but don't take from any of the other envelopes when your money runs out. This is the entire reason for the budget.

5. Roll over your miscellaneous envelope - If you have money left over in your miscellaneous envelope then roll it over into the next month. You'll be glad you did when your $5000 new furnace expense comes up! You can even open a savings account to hold your miscellaneous funds and only add to it, do not withdraw from it unless you need emergency money.

6. Pay yourself first - Every financial planner will tell you to always pay yourself first. Even if it's just small amount, put money into a savings account every month for yourself. This money is different than the "miscellaneous" envelope, this is for long term savings. Just make sure you have a nice little nest egg for yourself for the future. You'll be glad you did.

These proven, simple tricks are very effective. They will not only help you figure out where your money goes, but they will make you more careful with your spending. You'll bring your debt down faster and your money will stretch longer!

This method has been around for years (I learned it from my grandmother!) and has helped many people budget their money. It will help you too if you learn restraint and stick to the method.

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