Have you tried the 'envelope method' of budgeting?


When I started my business over eight years ago, money was tight. I mean really tight. I had no client base and no savings to fall back on. And no spouse to help pick up the slack financially. I was on my own, and working in an industry with a very long sales cycle. What was I thinking?

I ate my fair share of ramen noodles and macaroni and cheese. I clipped coupons and trolled the sale fliers for bargains. One of the ways that I managed my budget was by not using credit cards. I knew that in my precarious financial position, playing with plastic could get me into trouble quickly.

So if I didn't have cash, I didn't buy anything. The "envelope method" of budgeting worked very well for me at that time. Each month, I put a predetermined amount of money in envelopes for groceries, gas, household supplies, medical, and life's other necessities. When the envelope for a particular item was empty, I was done spending for that month. If I had money left over in an envelope at the end of the month, I used it as fun money.