Living Frugal
What is Envelope Budgeting

Envelope Budgeting involves organizing envelopes by the name and average cost of the bill per month and putting the money in the envelopes to pay that particular bill. It is an absolute must if you want to be successful in living frugal and have zero debt.

Using envelopes and cash prevents you from spending the money because when you put it in the envelope, consider it gone.

Just because it's called envelope budgeting doesn't mean you have to use envelopes. You may want to try using a coupon organizer. Label each pocket of the organizer with the name of the bill along with the average amount due per month. Each time you get paid, you put money in the organizer pocket allocated to pay that particular bill.

Budgeting in general will require some discipline to be successful. You must train yourself to allocate the money for the expense and never think about that money again - it's not yours. You use it to pay the bill and nothing else.

You also want to allocate yourself spending money as part of the budgeting system. When your spending money is gone, it's gone until the next time you get paid. I would consider "spending money" as money that you might spend going out to lunch or dinner.

You also want to have an envelope so you can save money for emergencies and unexpected expenses such as a flat tire, doctor's appointment or maybe even a broken down car. When emergencies come up, you don't want to be stuck using your credit card or resorting to not paying another bill. Allocate a set amount into an emergency fund so you are never caught off guard.

These days lots of people are opposed to using cash. They'd prefer to do online bill pay or another electronic method. You may have a separate account setup to pay the bills while any spending money is what is left over in another account.

I personally do not recommend this method. It's too easy to whip out your debit card and spend the money without really realizing how much you've spent.

Using cash gives you a better reality of how much you've spent. It's a lot harder to bust a hundred dollar bill than it is to debit $100.00. Something about seeing the hundred dollar bill go away gives you the realization of how much it really is.

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