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00
Enter your cash inflows and outflows on the left. Next, sort all money into
envelopes on the right. All money must go into and come out of an envelope.
This way you know how much you have saved for what. If your "Books & CDs"
envelope is empty, you can't buy any until there's money in there.
Easily save ahead of time for big expenses like travel or have separate
envelopes for winter and summer utilities so you aren't surprised by a big
heating bill. Keep money earmarked in an emergency envelope and some in a
savings envelope. This way you don't just see a total bank account value and
think you can buy whatever you can currently purchase.
Why to Use
For those living paycheck to paycheck. Based on the old fashioned system of sorting
cash into envelopes each month for expected expenses. Once the "New Clothes"
envelope was empty, no purchases were allowed until more money was sorted into
that envelope. If you needed to transfer money from one envelope to another, you
knew what you sacrificed for that purchase.
Today's cashless purchases and larger bank accounts have made this useful system
go out of fashion. People look at their accounts and see $2,000 and think, "I've got
plenty of money." However, $900 is for next month's rent and $1,000 for expected
expenses. Only $100 is available to spend. Welcome to virtual envelopes!