How the reliable envelope system works to control monthly expenses

Getting to the end of the month without debts and meeting all basic expenses can become a problem if you don’t know how to control your budget.

Good budget planning not only includes necessary expenses, such as basic household services or transportation, but also makes room for outings and hobbies, as well as allocating value to savings.

The envelope system is an efficient way to create a budget and stick to it, especially if you need to cut back on spending in one area of ​​your life.

Identify your goals for 2023 and put your finances in order

This method works by creating several categories of your expenses according to your income and then allocating an amount of money to each category. You apply that directly to the envelopes, so you will need the money in cash; and, every time you go to pay, you only take the money from the envelope.

Steps to apply the envelope system

1. Make a detailed list of how much money you earn and how much money you spend monthly or weekly.
2. Create categories of your expenses. These may be the most important:
4. Assign an amount to each category and place the money in an envelope that represents that category.
5. Spend the allotted money in each envelope. If you go to the supermarket, only take the money that is in the envelope for food purchases. If you plan an outing with friends, only take cash from the outings or personal expenses envelope.
6. Do not borrow from other envelopes. The goal of the method is to control your spending, so you need to strictly follow the limits you set for yourself when you started. What you can do is cut expenses from other areas where you are spending more and allocate it to the envelopes that are missing.
7. Keep the receipt of what you spend on the envelopes. So you can confirm at the end of the month how much you spent in each category.
8. Avoid using credit or debit cards. If you do, remove the money from the envelope to which the expense belongs and deposit it in the bank account with which you paid.

(YO)