Making money in today’s world involves intelligence, motivation, and hard work.  Without this, you’re not going to see an influx of money coming into your pocket each and every week.  One of the hardest things about making money is organizing and budgeting it.  Without a proper budget, it’s extremely tough to keep track of finances.

One of the most popular ways to budget your money is with the “envelope system”.  One of the most popular debt gurus by the name of Dave Ramsey heavily promotes this type of system.  The system is actually very simple and we’re here to help explain it a lot better.

The first step you’re going to want to take it writing down every single bill you have.   You will want to include everything regardless of how much you pay.  If you only pay $5/month for a gaming service on the computer, you should include it.  When you have the whole list written up, you’re going to want to get an envelope.

On the front of the envelope, you’re going to want to mark it “bills”.  These are the bills you have to pay each month.  Don’t include bills that change each month such as groceries or hobbies.  This will be included later on in the tutorial.  Once you have the envelope labeled bills, you can either put fake bills inside of this envelope or you can actually put your real cash inside.  We’d highly recommend you store fake bills in there.  The purpose of this concept is to show you how much of your monthly income is going toward bills.

After you get your bills out of the way, the next step is to create an envelope for each of the bills that change each month.  This will include your grocery bill, gas/travel, your hobbies, and things of that nature.  If you pay attention to your budget, you will be able to understand how much you can spend on groceries each week.  If your grocery budget is $200 per week, you will want to store $800 in this envelope.  This way you’ll be able to see how much money you’re able to spend at the grocery store.

Once you have all the envelopes laid out and labeled, this will give you an idea how much you can spend each month.  What a lot of people do is take out the fake bills when they are going to spend them and head over to the ATM or bank to take out that exact amount.  If you’re heading to the grocery store and you’re going to buy a box of baseball cards for your hobby, you will want to take out however much is in your budget out of your envelope.  It’s important that you remember this so that if you go to an envelope in the future and there’s no money in it, you’ll know you went over your budget.

One of the best ways to do this process is to use fake money such as monopoly money.  The envelopes can easily be recycled each month as your bills tend to not change as often.  If you stick to the program and use your money wisely, your budget should be on the right path all the time.