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Use the Power of Envelopes to Take Charge of Your Spending

Use the Power of Envelopes to Take Charge of Your Spending 10/26/18Using an envelope system can help you track your spending and keep it under control.  For some, an envelope system might seem like a desperate measure, but it works.

The first step is to develop a spending plan.  This is sometimes referred to as creating a budget. 

The next step is to set up an envelope budgeting system and/or a receipt budgeting system for yourself.  An envelope budgeting system is for cash.  A receipt budgeting system is for debit and/or credit cards.

For the envelope budgeting system, follow these steps:

  1. Make an envelope for each of your budget categories. Be sure to make one for savings.
  2. Put the amount of cash in each envelope that is budgeted for the budget period (week or month).
  3. Every time you take money out of that envelope, write it down on the envelope.
  4. If or when you run out of cash in an envelope before the end of the budget period (week or month), you have spent your allotment for that category.
  5. If you have leftover money in an envelope at the end of the budget period, put it in your savings.

Do your best not to move money between envelopes.  If you find you need to take from one envelope to supplement another envelope, you may want to revise your budget or cut spending in the category that was “short.”

For the receipt budgeting system, follow these steps:

  1. Make an envelope for each of your budget categories. Make sure you make one for savings.
  2. Keep receipts for each purchase, even small ones. If you used cash or did not receive a receipt, make your own.
  3. Put receipts in the corresponding envelope. Every time you add a receipt, write it down on the envelope.
  4. If there is money left in a category at the end of the month, put it in your savings.

If you find that you are overspending in a certain category, you may need to revise your budget or cut spending in that category.

Both systems described above rely on first creating a budget.  Check out the four steps to creating a budget, and the NDSU Extension Budget Boss resources, online at https://www.ag.ndsu.edu/adulting/blog/learn-to-budget-like-a-boss-create-your-first-budget-in-4-easy-steps

Photo Source: https://pixabay.com/en/message-envelopes-mail-letter-1263977/ (downloaded 10/30/18)

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