Envelope Budgeting System

[midnight]

I keep hearing a lot about the "old fashioned envelope budgeting system" Can someone please give me information on this system in detail on how it works?

I understand that you place money in envelopes. How many catagories do you split the money into? And how do you determine the amount to give each catagory the first time?

Does anyone use this system and would you recommend it ot not?

[terry1156]

The envelope system is very flexible and simple making it a great budgeting tool. We used this when we were first trying to get our budget under control.

<b>How many catagories do you split the money into?</b>

This is completely up to you. Start with basic categories and you can refine them and make them more specific as time goes on.

<b>How do you determine the amount to give each catagory the first time?</b>

If you already have a budget, then this shouldn't be a problem. If you don't, then the best thing to do is make a guesstimate for each. Do your very best to stay withing what you budgeted for each area, but if you can't at first, make note of what areas you couldn't do and make adjustments taking this into account the next month.

I hope you give a try. If you are having trouble, post here and I'm sure someone will help out. Good luck.