Envelope budgeting system

The envelope budgeting system can help you get control over your spending. Basically you stack cash into different envelopes for different spending categories like entertainment, fuel, giving, shopping, etc. You then spend from these envelopes. Once the cash is finished you stop spending until the next pay day.

The method works best with actual cash. There is a tendency to over spend when we actually don’t use cash. It is much easier to spend through mobile money, credit cards and bank transfers. Holding cash creates some physical awareness of what is available to spend. It also sets physical limits on spending. When there is no cash in the envelope spending has to stop. This method can be effective for anyone who struggles with budgeting as money has to be allocated into different envelopes.

Done frequently a habit of cautious spending will develop. Managing finances is really about increasing our awareness of how money flows in and out of our lives. Once we realize how this process works we then begin to control it. And once your control something you are able to extract value and meaning from it.

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