The envelope system, also known as the envelope budgeting method, is a popular method for visualizing and maintaining a flexible budget. The key idea is to prioritize cash income to meet separate categories of household expenses in physically separate envelopes.
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Usage
Typically, the person will write the name and average cost per month of a bill on the front of an envelope. Then, either once a month or when the person gets paid, they will put the amount for that bill in cash in the envelope. When the bill is due, the money is taken out to pay for that bill.
This prevents the person from spending the money out of their pocket or bank account, because it is already allocated to the bill.
This strategy can be adapted to multiple checking accounts, too, in lieu of envelopes. Or by using budgeting software based on the envelope system.
See also
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Participatory budgeting
Participatory budgeting (PB) is a type of citizen sourcing in which ordinary people decide how to allocate part of a municipal or public budget through a process of democratic deliberation and decision-making. Participatory budgeting allows ...
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Personal budget
A personal budget (for the budget of one person) or household budget (for the budget of one or more person living in the same dwelling) is a plan for the coordination of the resources (income) and expenses of an individual or a household.
Purpo ...
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Programme budgeting
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Zero-based budgeting
Zero-based budgeting (ZBB) is a budgeting method that requires all expenses to be justified and approved in each new budget period. It was developed by Peter Pyhrr in the 1970s. This budgeting method analyzes an organization's needs and costs by ...
References
{{DEFAULTSORT:Envelope System
Budgets
Personal finance