The Envelope System

By Jareed Robinson - What is it and how can you use it?

What Is the Envelope System?

Placing cash in separate envelopes that are labeled based on your planned budget.

Why Use the Envelope System?

The Envelope System can help develop positive spending habits on discretionary purchases such as groceries, gas, and entertainment.

Labeling Envelopes

Start by listing out all discretionary spending categories and sort into categories. Each category should have its own envelope created.

Advantages of an Envelope System

The use of an envelope system can help prevent overdraft fees and unnecessary debt created from the use of debit and credit cards.

Disadvantages of an Envelope System

With the use of cash purchases, you lose out on any protections and/or advantages from the use of a credit card.

What's Next On Budgeting?

Next Story: The Zero Based Budget

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