Envelope Style Saving

Envelope plans have been around for many, many years. My parents used it when I was a child and I use it still today.  The general idea behind an envelope plan is simple. Look at your budget.  See how much you have to spend each month on let's say groceries.  You take that amount out of your checking account and then put it into the envelope marked groceries.  When it is time to for you to go shopping you simple take that money and your list to the store.  When the money is gone, the shopping is finished.  I use this plan for bigger ideas also.  I have an envelope marked vacations. Each week I put as much as my budget says that I can afford into the envelope and when it comes time for that special get away trip, it is already paid for.   You can also use this same plan for monthly or yearly large payments.  Let's say you have a house insurance to pay every six months.  If you divide that payment by six then you can put one sixth of that payment away each month.  It will be ready when you need it but not feel like such a big amount when needed.

The key is to mark the envelopes with whatever the money is allotted for and not to borrow from one envelope to give to the other.  If you borrow from the other envelopes you will not keep on budget and will only get frustrated and back in debt.  Remember if you know your budget and have it all written down you will do much better at keeping on it.