Envelope System

Envelope System

The envelope system [http://www.debtsteps.com/envelope-system.html] , also known as the "envelope method", [cite website | title=The Envelope Method | url=http://www.betterbudgeting.com/articles/money/budgetbuilding101.htm] is used as a way to help people budget their money. Typically, the person will write the name of a bill and how much it costs them per month on the front of the envelope. Then, either once a month or when the person gets paid, they will put the amount of money on the front in the envelope. When the bill is due, the money is taken out in cash and the bill is paid.

This prevents the person from spending the money out of their pocket or bank account, because it is already allocated to the bill.

This is a budgeting mechanism often suggested to people by Dave Ramsey cite book | title=The Total Money Makeover: A Proven Plan for Financial Fitness| last=Ramsey| first=Dave| year=2003| pages=5| publisher=Thomas Nelson, Inc.| location=Nashville, Tennessee| id=0-7852-6326-8] [http://www.daveramsey.com/etc/cms/index.cfm?intContentID=3461]

References


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