- 1). Learn about envelope budgeting. Often called envelope or bag accounting, this budgetary idea utilizes envelopes to hold funds designated for a specific purpose. In short, each envelope contains a label clearly marked with the name of the item for purchase or payment.
- 2). Understand how the process works. Very simply, a dedicated saver puts money into one of the envelopes and uses those funds for the exact purpose stated on the envelope. For instance, when one plans to purchase a shirt he uses funds from the envelope labeled clothing. If funds for clothing fall short that month, he must wait until he puts more money into that envelope before he buys additional clothes.
- 3). Explore the benefits of saving money with bag accounting. Withholding purchases from an envelope lacking funds compares as equally important to building savings from an envelope containing extra money. In other words, envelop budgeting offers users a chance to build up funds when designated purchases remain unmade. Simply continue adding to that envelope.
- 4). Use envelope budget software that features a budgeting method that mirrors bag accounting. Look for progressive applications that feature ways to manage credit cards and reconcile personal bank accounts. In addition, find software that offers the ability to import personal banking transactions.
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