One of the most frequently asked questions by our readers, when it comes to personal finances, is How To create a budget.

The envelope system is very basic, but generally a very successful way to make a budget. It is a bit primitive in our technologically advanced society. But most Americans are in debt up to their eyeballs, largely due to the fact that technology has made it very easy to go in debt. So, if primitive works, why not do it?

  1. I would suggest paying all of your BILLS (Mortgage, Electric, Phone, etc.) from your checking account, and then I would use the envelope system for the remaining money.
  2. Make your list of items that you need to budget for (groceries, gas, entertainment, clothing, etc.). For this system, I would suggest making the categories as specific as possible.
  3. Now that you have a list, estimate a monthly or bi-monthly dollar amount that you will need next to each item. If you don’t have good records of your spending, this may take a couple months to get this right.
  4. Buy a box of envelopes, get out a big, stinky Sharpie marker and write a name on each envelope (groceries, gas, entertainment, etc.).
  5. Go grab the cash from the ATM and fill up each envelope with the allocated amount. The key to this system is that when the envelope is empty, you are FINISHED spending for that period. It forces you to plan ahead based on how much money is allocated.

I think it is a good idea to create a MISCELLANEOUS envelope, I promise that you will find something to use it on that you had not planned and if you don’t, then let it keep getting bigger until you do. Because you will use it eventually.You will have to make adjustments the first few months, but just start somewhere and keep tweaking it until it is just right.

Guest Post by Bob at


  1. >Wow! This is such a wonderful idea. Thank you for sharing it.Stopping by from "All About Toys"

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