Monday, May 19, 2008

The Envelope System for a Digital Age

The Envelope System, if you aren't familiar with it, is a simplistic way of sticking to a budget. Basically, you work out a monthly budget. Then, every time you get paid, you take the appropriate percentage of each budget item and stick the cash in an envelope. Once you've spent all the money in the "Groceries" envelope, you're done until the next payday. I've found this system to work very well, but it involves going to the bank every week, withdrawing my paycheck, dividing everything into envelopes, then going back to the bank every time I pay a bill. With direct deposit and online bill pay, this is an obtuse and time-consuming activity.

There had to be a better way. So I designed a spreadsheet to do the work for me. Just click the link and download the file. It should be pretty self-explanatory. Obviously, some of the values are changed, but if you aren't spreadsheet-savvy, let me know, and I'll help you customize it.

It should be noted that I use this spreadsheet in lieu of financial software or a check register. For one, its cheaper, and I enjoy the simplicity and cost-effectiveness. For another, I don't need a lot of power to pay bills - that's what my online banking does, again, for free.

Anyway, this is a solution that has worked well for me since I've switched to it and has made my life much less complicated, since my trips to the bank are now on an "as-needed" basis, rather than at least a weekly trip.

I am always interested in other tips and tricks, so if you have seen success using a tool, please mention it or let me know...

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