My wife and I have heard about budgeting money using cash in envelopes that separate different categories of spending, but I guess we never though it was “for us.” The more I thought about it, I figured that if it saves money in the end, why not do it? So I went to the bank and got out some cash for three main categories of spending (plus one for “other”) that are categories that are not “fixed” each month. These three are groceries, dining out, and gas. These three categories usually end up fluctuating each month because my wife and I have no budgeted goal for keeping those expenses down. With these envelopes, we know we can only spend “x” amount of dollars at the grocery store this month. Whatever is leftover we can put into savings and then start all over again next month.
If you think about this, it will save money and give more freedom. We will save money because we won’t just impulse buy – we actually have to think about our purchases before we put them in the grocery basket. It also produces more freedom (ironically) because we know we can go out to eat and spend money from our “dining” envelope at some nice restaurant at the end of the month because we held back from dining fancy at the beginning of the month. We often go out to eat and feel somewhat guilty that we are spending money frivolously. But now that we have a budget, we can feel the freedom of spending what we budgeted.
The reason why many people have financial wealth in this world is because of a simple principle called “delayed gratification.” They shop at JC Penny and maybe even Thrift Stores. The other reason they are wealthy is because they spend less than they earn. And that is a principle that can apply to anyone of any income level.