Are you a fan of the “envelope method”? If you don’t know what it is, it’s basically a system where you take chunks from your paycheck every pay period and plop a certain amount of money into a designated “envelope”.
Then, when it’s time to buy something – groceries, clothes, whatever – you pull this $ from the corresponding pouch and you’re good to go.
I actually haven’t tried this myself in all honesty, but I know a lot of bloggers and friends that swear by it. In theory it works out well because you can only spend what’s there. On the other hand you’d have to convert your checks into cash every time, or visit the bank since ATM’s only pump out a certain amount per day. Not the hardest thing to do (I’ve enjoyed cashing it out before! REALLY makes you realize how much you have), but it’s not as easy for someone like me to do every 2 weeks. Again though, if it *works* then keep on doing your thang.
Most people work it out with plain white envelopes, but I say hook yourself up with some sexy a$$ creations from my girl over at Chicky Finance! She just came out with these hand-made green & white envelopes over on Etsy (pictured above) and they’re labeled and everything – Grocery, Clothing, Entertainment, and Health/Beauty. She’s selling them for $20 with no shipping costs, and will even custom make other categories upon request. Totally awesome if you’re looking to jazz it up a bit ;)
Of course, there are other ways to budget this way too. Instead of physical envelopes, you can go electronic and set up “sub-accounts” with ING Direct to basically do the same thing (although it might be better for “saving funds” like for traveling, auto maintenance, emergency funds, etc, but not sure). There’s a great post from Get Rich Slowly that breaks it down pretty nicely, and if I weren’t so hardcore for USAA I’d totally hook it up. There’s also downloadable software you can find online like MoneyFolders.com which promotes features like “printable wallets” or “purse balance cards” to help gain control of your money.
Or you could even use your credit card for this stuff, and at the end of the month pay it off in full and go over what you spent for which category. This one has its fallbacks like overspending & not remembering/being able to pay it off in full, but it’s great for those who want super simplicity – aka me :) Not sure if it falls directly under the “envelope system” like the others, but it’s still a cool budgeting tool.
In other words there are a TON of ways to budget – and all are sexy if they WORK. Unlike math class, there are not right or wrong answers here. Only those which help save you money, and those which help take it away. I’m all about the first one ;)
PS: Some of my favorite tools:
|Personal Capital (FREE) -- If you’re looking for a robust financial tracker, Personal Capital is the way to go! They’re like Mint, but on steroids and have much better tools for investment and net worth tracking. // Full review|
|Digit (FREE) -- A super easy (and automated) way to save. Every day Digit analyzes your income and expenses and will push money aside for you any time it sees extra sitting there. I've saved over $4,000 myself using them so far! // Full review|
|Acorns -- Having trouble finding money to invest? Check out Acorns – they round up all your transactions to the nearest $1.00 and drops the difference into an investment portfolio for you. Easy way to start investing! // Full review|