The Absolute Best Way to Save Money Using the Envelopes Method

Do you know how to save money using the envelopes method and spending only cash?

How to Save Money Using EnvelopesKnow how to save money using the envelopes method to budget your funds? Title Tree will help you learn this surprisingly simple method for ensuring you always spend less than you earn. It’s easy to get started, but, as with any new habit, it takes about a month to really work. You can use it to control your whole budget or just the areas you struggle with every month.

Get Started With the Envelope Method

The envelope method requires setting your budget before you cash your check. According to MoneyCrashers.com, it’s essential to set your discretionary income, i.e., the money left over after contributions to your bills and savings. You then divide these funds among certain spending categories, from groceries to entertainment. Base the amount placed into each category on your previous spending, then split your cash up accordingly.

Keep Your Cash Secure

While the method calls on envelopes to keep you organized, successful spenders often prefer an accordion file folder. This makes it easy to access your money quickly, even during complicated purchases.  For instance, if you stop at the store and buy $20 in groceries, $20 in clothing and $20 in cleaning supplies, you can quickly grab a $20 bill from each spending category versus fiddling with three different envelopes. It’s simple conveniences like these that will help you make the most of the envelope method.

Only Spend What Money You Have Available

After setting a budget for your pay period, stay committed to avoiding credit cards and the ATM. You will leverage the risk of running out of cash to make better spending decisions and gain control of your spending habits. If you cheat by getting extra funds when they’re needed, the envelope method won’t work for you. However, if you stick with it, you’ll be guaranteed never to spend more than needed. Over time, you’ll notice you become more thoughtful each time you consider a purchase.

Use Remaining Cash to Your Benefit

Resist the urge to spend your remaining cash on a random shopping spree. Put your new-found discipline to real work. To deliver a one-two punch to your debt, use the remaining cash in every category to pay down your bills. Regardless of your interest rate, paying down debts early will help you attain financial freedom faster than you ever imagined.

Save Money Using the Envelopes MethodHave you already moved beyond debts? Use that extra cash to beef up your savings accounts. Yes, accounts with an “s.” You should have more than one. First, you’ll want an emergency fund equal to 6 to 9 months’ worth of your finances. This is money you don’t touch unless you’re dealing with disaster.

After you establish your emergency fund, it’s time to start saving for retirement, as well as establishing a special account for any financial goals you may have, from a family vacation to saving enough for a new car.

Make the Move to Digital

With so many mobile apps aimed at helping people set and stick to budgets, it’s amazing that a paper-based method is still so popular and effective. Unfortunately, with services like Mint.com, you can still easily overspend once you’ve set your budget. With the envelope method, you simply don’t have more money on hand. But what about people who rely on tech advances to keep them on track?

There are a variety of programs that mimic the envelope method, while allowing you to continue to use credit or debit cards. In the process, you’ll continue to accrue cash back and other rewards. You’ll also have the convenience of using a payment method you can use online or in person. mVelopes, Pie Budget and YNAB (You Need a Budget) are just a few mobile apps similar to the envelope method that are still compatible with plastic.

If you’re working on learning how to save money using the envelopes method, an auto pawn could help. Call your nearest Title Tree location for help now.