How to Make an Envelope System

A key component of living on a budget and reducing debt is using and envelope system to help manage your cash. Many companies provide these systems for around $20 however with less than $5 you can make your own.

Things You'll Need

• Expandable coupon envelope
• Cash
• Small pocket size notebook
• Fine tip pen

Instructions

1. Determine the number of monthly expenses you will be paying cash for with cash. If you are on a budget the easiest way to track your expenses is by using cash. Using cash will help you know exactly how much money you have at any given time.

2. Purchase a small expandable envelope with 10 to 12 sections. Using the pen and the provided tabs label each section. You should have one section for each category.

3. Place the budgeted amount for each category in the proper section of the divided envelope. In the small notebook note the amount budgeted for each cash expense.

4. Record the amount spent each time you remove money from the envelope. This will help you to understand where your money is going and look for ways to reduce expenses each month.

5. Carry the envelope with you when you leave the house. Remember that once all the money is gone from a particular section you cannot spend any more money on that category until the next pay period.

Tips & Warnings

• Remember to include everything from dining out money to grocery money.