![]() To get started, you'll want to have two checking accounts and at least one savings account. This budgeting style is kind of like the laid-back cousin of the envelope method. That said, if you run out of money for something essential like groceries, definitely grab the cash from somewhere else and try again next month. If the envelope is empty, you're done spending until next month. When you run out of cash in an envelope for a "wants" category, don't "borrow" from another category or get out your debit card. Now, remember that $350 you planned to spend on groceries? Put that amount into your grocery envelope, and only use that cash when you head to the store to restock your pantry. Personally, I prefer to stash my savings in a high-interest account, but it really comes down to what you're comfortable with. Some folks recommend actually cashing your whole paycheck, including taking out cash for your savings. Next, head to your bank or ATM and withdraw enough cash to fill all your envelopes. Alternatively, you could also try using the 50-30-20 guideline here to figure out your spending plan. So, you decide to set aside $350 for groceries this month. For instance, let's say last month you spent $400 on groceries, but you think you could spend a little less. A good place to start is by looking at your bank statement to see how much you spent in the previous month and using that number as a jumping-off point. Now comes the hard part: figuring out how much you want to spend on each category. Feel free to be as specific or general here as you like. The first step is to take a handful of envelopes and label each one with a spending category, from basic essentials to fun money. And a great perk of using cash is it gives you a more concrete idea of how much money you really go through. ![]() It's a little old-school (and it might not work for you if you spend a lot of money online) but the envelope system is a tried-and-true cash budgeting method.
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