The Envelope Method 💌
Budgeting today feels a bit like carrying around a floppy disk in 2018. It's outdated and no one is really sure where to find one or how to use it. The problem with budgeting is that companies and advisors make it too complex. Budgeting should not be a tedious task but rather one that is simple to use and understand.
One of the biggest issues with establishing a budget is that it is too easy to spend money. Most of us have our credit cards saved on our computers or an app on our phone that lets us check out anything at anytime. Money is so accessible that we spend it whether we have it or not (i.e. credit cards). It's no wonder we are overspending! Most of us probably look at our bank statement at the end of the month and don't remember the majority of the charges.
The mindlessness has to stop.
This is where the envelope method comes in.
The envelope method is a jolt to the system. What is it? It is a method of taking out the cash you need for the month, putting it in appropriately labeled envelopes, and spending only that for the month. Oh, and you don't have to start out doing ALL your expenses this way.
I can already hear the groans. "But, Ellie, what about the points on my credit card??" Points don't pay off your debt.
Start with something simple like your entertainment for the month. So, anything that you want to do for fun, put a dollar amount to it, take it out at the beginning of the month, and spend ONLY that. You will be blown away by how quickly the money goes by and how often you feel yourself reaching for that credit card. Once you have this method down, go to other categories in your budget.
I'm not asking you pay all of your bills this way. Just the ones that feel out of control. I get it! Sometimes it is easier to pay your utilities, rent/mortgage, and other fixed expenses through your credit card or online. However, categories that you are struggling with overspending, try the envelope method.