An Old School Budget Hack That Actually Works
Your Grandparents stacked cash under their mattresses, in books and even freezers for generations. While this may not be the most effective strategy to become a mega zillionaire, using the envelope system is a proven way to keep your budget in line. Most of us are leaking cash out our eyeballs on impulsive useless material items. (most of which we regret purchasing 48 hours later) We end each month with little to show for our time slaving away at our 9-5. Over the long haul this leads to poverty and a life of regrets.
The envelope system lets you organize your cash according to spending categories at the beginning of each month. You take from the envelope when you make purchases. When you run out of cash, you are done for the month. This is a recommended strategy for individuals under 35 years old with a net worth of less than 250k. (If you do not know your net worth, download the Betternance Scorecard on the homepage)
Benefits of the envelope system:
Organizes your expenses each month into categories.
Keeps you accountable with your spending habits.
Makes it harder to spend on impulsive items (handing cash to the cashier is harder psychologically than swiping the card).
Increases your financial intelligence due to increased awareness around exactly where your money is being spent.
Your envelopes can be categorized by the following expenses. (You can choose the ones most relevant to you, or add others not included.)
Gas
Grocery
Restaurants
Supplements/medicine
Entertainment
Gifts
Personal Care (hair, makeup, massage etc.)
Car maintenance
Vacations
The envelope system has brought numerous people out of financial struggle and back into the winning category. Implement it today and you will be on your way to financial freedom.