Budgeting For Dummies

Chapter 5

The Envelope Budget

IN THIS CHAPTER

Establishing an envelope budget

Examining the benefits and downsides of using an envelope budget

Figuring out whether an envelope budget fits your life

One of the scariest things I’ve done in my life is decide to pursue self-employment. I’d worked in the nonprofit sector for more than 20 years and loved it most of the time. Being on my own since age 15 meant that a steady paycheck was what security looked like to me, and I had a hard time letting that go. Without steady pay, my income took a significant hit. Suddenly, I was more anxious about money than I had been in a long time.

Determined to make my money last while I worked on securing clients, I decided to try out the envelope budget system. The envelope budget method (also referred to as cash envelopes or cash stuffing) is an effective way to monitor your cash flow visually and interactively. Like the zero-based budgeting method I discuss in Chapter 3, you assign a dollar amount to a list of categories that your expenses fall under. However, the envelope budget doesn’t require you to sort through your checking account to track expenses or sit in front of a spreadsheet to determine ...