Many people have asked me what kind of budgeting method I find is the most effective in budget planning. I don’t think they deviate much but the one that I find the most effective is Envelope Budgeting.
What is Envelope Budgeting?
It is a systematic way to plan how much money you have to spend and how you go about to spend it in a control manner.
How does Envelope Budgeting work?
Envelope Budgeting can be broken down into 4 steps:
- Plan your budget spending categories
- Create envelopes or containers to hold the cash allocated to spend
- Spend within the limits set!
- Monitor and Review your Envelope Budgeting Plan
1. Plan your budget spending categories
First step is to create categories of what you will spend on. Take note to include the most obscure spending, such as a one time child kindergarten fee, or a fee on an art course.
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