Using cash envelopes is one of the simplest ways to help manage your money and stay within your monthly budget. It is a great way to help you get out of debt and stay out. And it is easy to set up and to manage.

Start out by figuring your monthly budget on paper. You still pay your regular bills from your checking account. These would be things such as your rent or mortgage payment, utility payments, loan payments and credit card payments, and anything else that you pay regularly. Now you must decide which of your budget items should be paid with cash. Typically, these would be things like grocery money, entertainment, miscellaneous expenses, household expenses, and so on.

Get some envelopes and label them with each cash item that you decided on. Go to the bank and get cash in the amounts you have figured from your budget for each category. If you get paid twice a month, you might want to split the amount in half and fill your envelopes twice a month. Get your cash in denominations that will be useful for that particular expense. For example, you might want $20’s for entertainment money, but $50’s would do well for grocery money.

Pay your cash expenses out of the envelopes throughout the month as needed. When the cash is gone, stop spending! When you see that your money is running low, you can adjust your spending so that you can make it to the end of the month. If you really get into trouble, money can be transferred from one envelope to another to make up for shortfalls. However, do not use your checking account or your credit card to make up for the shortfalls. This will cause you to get further into debt and wreak havoc on your budget.

The envelope budgeting system is a simple procedure that can cure bad spending habits and help you stay on your monthly budget. It is worth investing some time and effort into.

By: Tyler Park