![]() ![]() L ogging expenses takes nothing more than a pad and pen or simple spreadsheet software.Taking control of this single aspect of your finances can yield great results. One thing many people forget when putting together a budget is that variable and unexpected expenses can be big budget busters - think of something like a sudden car repair, or maybe the sudden realization that you forgot your niece’s birthday. This system is more of a tracking tool than an overall budget tool, and can actually be used together with a budget like the envelope system. But for everything else, the envelope system keeps your daily spending under control. ![]() Won't work for every bill: Naturally, there are expenses that you can't add to the envelope system, such as your mortgage or rent payment, utilities, and other bills that you must pay using a check or debit card.Meant for daily expenses: This method is mainly useful for daily expenses, such as groceries, services like haircuts, and fun, like going to the movies or out with friends.But the idea is to maintain some consistency in your spending habits from month to month and to limit it to a reasonable amount. Doesn't account for emergencies: If you do run into an emergency, of course, it’s up to your discretion whether you dip into other funds.You'll just have to resist the urge to dip into another envelope to pay for something that's over your budget. Relies on self-control: The envelope system works because once the budgeted money is spent, it's gone.Run out of entertainment funds? That’s that. The amount in each envelope is all you’re allowed to use in each area.Into each envelope then goes the cash that you have allotted for each expense. It may take a month or two to iron out, but estimate how much on average you spend on each area.You'll label an envelope for each separate expense that you incur on a regular basis, such as food, fuel for your vehicle, and entertainment.However, that's how it was done for generations, and it's still doable. It might take some time to adjust to the idea of spending cash instead of swiping a debit card through the machine at cash registers. The system is efficient, and you've got a visual aid - your money - in the palm of your hand. ![]() The envelope budgeting system hails from a bygone era, but it still works today. There are simple tools that you can master in an hour or less, and here are five of the best. Budgeting doesn't have to come in a complex package with a hundred bells and whistles that you'd need an accounting degree to understand. With the right approach, you can manage your debt and monthly expenses. Budgeting is one of the best strategies that can help you tackle your monthly debt and help ensure that you have a bit of financial breathing room. The average household (two people) has about $137,000 in debt, including student loans, mortgage payments, credit card debt, and other loans. In fact, many Americans struggle with personal finances, especially where debt is concerned. However, many people might struggle to make and keep consistent budgets. Whether you’re planning ahead for a big expense, like a wedding or a new home, or simply need to keep track of your monthly finances, a budget is your first step to getting everything in order. Budgeting is one of the most important aspects of personal finance.
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