How To Do An Envelope or Jar Budget System

You can use jars or envelopes to manage your money with the money jar budget system and it can help you get your spending under control so you can:

  1. pay down debt
  2. live on a budget
  3. save money for the future

The vast majority of our spending problems revolve around our day to day spending or variable part of our budget. These are numbers that change every month and don’t include bill payments.

Variable expenses include things like  food, spending money, gas, entertainment. The key to the money jar or envelope budget system is to

a) reduce your spending and

b) stick to the budget you set.

You’re setting a specific amount of cash and allocating it to your spending and the key is to forget about using debit and credit cards. Once a week, refill your envelopes.

Here’s what it ‘could’ look like:

  • Food $150
  • Gas: $50
  • Entertainent: $20
  • Clothes/Gifts $25
  • Kids’ Allowance $20
    Misc: $50

Total: $315. This amount is flexible based on your own budget.

Allocate envelopes or jars that are labeled for each fund. At the end of each week, if you have any money left over you could use it for a specific fund or for a treat.  If one area runs low you might borrow from another area temporarily and shift things around but the idea is to stay with cash.

Saving for the future

The key to your variable spending budget is that it does not equate to all your excess money. If you earn $1,000 and your variable spending is about $315 and your weekly bills total $385, the $300 that is left shouldn’t be spent. Consider doing a 60/40 split between debt repayment (topping up bills beyond their minimum payment) and savings.

Your envelope budget can help you live debt free.  This system is based on the system used in the show, “Till Debt Do Us Part” and is not designed to deprive you of spending freely; it’s designed to teach you to manage your money effectively so you can spend without guilt and build a nest egg.

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