The envelope budget system explained
1. Put your income in envelopes.
The cash for each month’s expenses is taken out and divided into envelopes for each budget category. Like groceries, eating out, debt payoff, and kids.
2. Spend from the envelope.
Along the way, you take money out of an envelope to spend. For each category, spend out of the designated envelope — and only that envelope!
3. Stop spending and see how much you saved.
Stop once you’ve emptied the envelope — or before if you’re really disciplined.
Rather than figuring out that you overspent after the fact, you plan your spending beforehand and only spend what you have.
The problem is, carrying around a lot of cash in this age of debit cards and credit cards isn’t really convenient or safe.