What Are the Benefits of Envelope Budgeting?

Envelope budgeting is a system in which cash is put into a number of different envelopes for designated spending categories. Here are some of the envelope budgeting system:

Accountability

One of the biggest benefits of envelope budgeting is that it helps hold you accountable for your spending. When you actually have to get cash out of an envelope in order to make a purchase, you will make a conscious decision to spend. You have to put a lot more thought into that action. 

Prevents Overspending

With this system, you cannot spend more money than you have in your envelope for a particular category. Once all of the cash is gone, it is gone. You cannot replenish the envelope until your next paycheck. This will prevent you from overspending in most cases. 

Budgeting 

Another benefit of this system is that you have to physically sit down and look at your finances every time that you get paid. You have to decide how much money to allocate to each spending category. As you get involved with this process, you will become more comfortable with it. You will be able to set a budget and stick to it within a very short period of time. 

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