How to Stick to Your Budget Using Envelopes

Set aside the amount you can use for specific things each month.

One of the most difficult parts of sticking to a budget is accurately tracking how much you have spent. Receipts can be lost, entered incorrectly or simply forgotten. One way to ensure that you stick to your budget is by using envelopes to divide your money according to how you spend it. Only put the budgeted amount of money in each envelope so you'll only spend what you have -- and you'll know the exact amount you've spent.

Things You'll Need

• Envelopes
• Safe or lock box

Instructions

1. Take an envelope for each of your monthly expenses and write clearly what exactly the expense -- rent, groceries, utilities and entertainment, for example.

2. Use different colored envelopes or different colored ink to help you keep track of fixed expenses (amounts that don't change each month, such as your car payment) and variable expenses (amounts that aren't exactly the same each month, such as groceries).

3. Deduct anything you regularly set aside for savings from your paycheck or other income and deposit that in your bank promptly. Sticking to your budget involves saving smartly as well as spending smartly.

4. Divide the remaining money from your income among the envelopes to cover your expenses according to the amounts budgeted for the month. Put only the amount you owe in the envelopes; if you have money left over, deposit it in the bank or set it aside in an emergency fund envelope.

5. Store the envelopes in a safe, secure place, where no one can access them but you. A small safe or lock box works best.

6. Spend only the amount of money you have stored in the corresponding envelope for each expense. When the envelope is empty, spend no money for the corresponding item until you refill the envelope at the beginning of the next month.

Tips & Warnings

• Having prepared a monthly budget ahead of time will come in very handy.

• Be careful to store your envelopes in a safe place where they are unlikely to be disturbed.

References

• Bankrate.com: A 4-Step Plan for Out-of-Control Spending