The envelope method is an easy-to-understand system that allows people to keep tabs on how much money they’re spending. If there is money left over in any envelope at the end of the month, you can roll it over or pop it in your savings account. That money goes into the envelope labeled “groceries” and can only be used for groceries. If you get paid every two weeks, you have to set aside $250 of every paycheck for groceries. For example, let’s say you spend $500 a month on groceries. Typical expenses include things like groceries, gasoline, entertainment, dining, etc. The gist of it is that you keep cash for different expenses in separate envelopes. It allows people to budget effectively while avoiding any serious number crunching. The envelope budget allows people to easily compartmentalize and track their spending.
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