Financial Tools

Financial Articles

5 Days to Financial Success

Money3rd Recommends

Money Saving Tip

  •  

Money Fun Fact

  •  

 

  • Save for College with Upromise

Envelope Budgeting

At money3rd we believe that the simplest and most effective way to budget is by using the envelope budgeting system. The envelope method is not new, this method of budgeting has been around for many years. It dates back to when most Americans did not use banks. Most were paid in cash for goods and services, this forced them to manage their spending by utilizing only the cash they had on-hand. Eventually these households would begin using a simple and easy to use system. They would divide their cash and place it in labeled envelopes. Each envelope would have a name such as clothing, food, housing, savings, etc. By dividing your cash into envelopes, you can immediately see what on-hand cash you have to pay bills, make purchases, and contribute to your savings. The envelope method is simple to set-up and manage. It will take some time to get used to this method since it is not your traditional form of budgeting.

The envelope budgeting method forces you to pre-spend your income into various spending envelopes. This will allow you to see exactly how much you have to spend and when you can spend it. By funding the different envelopes you see exactly how you can spend your money until your next pay period which forces you to spend only what you can and rely less on paying bills with a credit card and incurring more debt. With the advent of the credit and debit cards, the envelope system has been on a decline- until now. As debt continues to rise in American households, the envelope method of budgeting is seeing a comeback. If your current financial situation is in need of an overhaul or you just want a simpler way to manage your finances, the envelope system may be just for you. An online version of the envelope budgeting may be a better solution if you like the convenience of debit and credit cards and online bill payments and transfers. One product that fully integrates the envelope budget system into a modern, online version is Mvelopes Personal. Mvelopes is completely online so you don't have to carry around physical envelopes stuffed with cash. Mvelopes can link directly to your financial institution and automatically update your spending budget when you make a deposit or transaction. The envelope system may seem overwhelming at first but after a little time you will see how effective it will prove to be. After you set up your envelopes, managing the system will become much easier. It may take a few tries to get it right, but it will be worth the time invested. Always remember to keep God 1st, people 2nd and money 3rd and everything will work out just fine.