![]() It's the career fair of budgeting, and unemployment is not an option. Next, we have the zero-sum budget, where every dollar gets a job. It's like having a monetary pie chart guiding you on where to splurge and save. This budget is the equivalent of financial dieting, where your income is split into three portions: 50 percent for necessities like rent and utilities, 30 percent for discretionary expenses like dining out or that fancy coffee you can't resist, and 20 percent going straight to savings or paying off debt. So, let's dive into the budgeting pool, shall we? Spoiler: it's not as chilly as it looks.įirst up is the 50/30/20 budget. But when it comes to envelope systems, budgeting is the unsung hero, the foundation upon which our cash-stuffed envelopes stand tall. All Envelope Systems Start with a BudgetĪh, budgeting, the cornerstone of financial wellness, and the thing most of us avoid like a broccoli casserole at a potluck. ![]() Yet, despite the naysayers, the envelope system holds its ground, proving that sometimes, old-school tactics have a place in our swipe-happy society. Critics dubbed it "cash stuffing," painting it as a primitive relic in a world of sophisticated budgeting apps. However, not everyone was on board with this financial throwback. They started stuffing cash into envelopes like there was no tomorrow. He advocated for the envelope method with the fervor of a preacher at a revival, and guess what? People listened. Each dollar had a destiny, a sense of purpose that went beyond vanishing into the abyss of impulse purchases.Įnter Dave Ramsey, the financial guru who saw the charm in this antiquated system and catapulted it into modern-day relevance. It was budgeting at its bare bones, no frills, no apps, just good ol' paper envelopes filled with hard-earned cash. You have a budget that even your grandma would nod approvingly at. The premise was simple: allocate cash for different spending categories, stuff them into labeled envelopes, and voila. Long before we entered the age of swiping and tapping our financial woes away (or, let's be honest, deeper into oblivion), there existed a simple yet genius budgeting method known as the envelope system -where cash was king, and credit cards were probably viewed with the same suspicion we reserve for expired milk. Yet, amidst this digital whirlwind, the envelope system stands as a beacon of budgetary discipline. Swiping plastic and tapping phones to spend money has become so familiar that handling tangible cash seems quaint, akin to making a call from a phone booth. It’s an easy way to set money aside and not get it jumbled up with the rest of the money in your savings account.Envelope systems are one way to closely monitor spending. ![]() I use a budget envelope for my Christmas money, for things I’m saving up for. Some people also use cash envelopes as a mini savings account, to hold their sinking fund money. No matter what payment method you prefer, I think it’s beneficial for people to try the cash envelope method for at least a few rounds of monthly expenses and spending. Once they get a feel for how much they should be spending, they transfer over to a budgeting app, or go back to using a credit card so they can earn reward points. ![]() Sometimes people only do the cash budget system for a few months to help get their spending habits in line. (We talk more on which spending categories this works best for below). For example, you wouldn’t use cash budgeting for debt repayment or your car insurance payment, as it’s online, and it’s a fixed expense, so there’s no need to budget it out because you know how much it will cost. Using an all cash budget is typically done with your spending money. The cash envelope system is great for someone who may be tempted to spend more money than they should, but with cash budget envelopes, they can’t spend more than the amount they determined doing their monthly budget planning. So it’s a safety catch for your monthly budget. Basically, at the beginning of every month, you decide how much money you want to spend in specific categories and stuff your envelope with that amount.ĭuring the month, you spend from your category envelopes, and once that envelope is empty you stop spending money. ![]() Cash envelopes are used as a way to budget your money it’s the “cash envelope system”. ![]()
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