The majority of our financial transactions happen using credit or debit cards and often via a website. In our world of electronic transactions, it's no longer practical to cash your payroll check and shove your money into envelopes. If you needed more money for a specific expense, you could take it from another envelope, but the rule was that you couldn't spend more than you had in those envelopes. Lastly, when it came time to spend your money, you'd only spend as much as you put in an envelope. Then when you got paid, you'd cash your check and divide it up according to the amount on each envelope and then set aside those envelopes until you needed to pay your bills. An easy way to manage cash flow was to lay out several envelopes and write a budget category on each along with an amount. What is the Envelope Budgeting Method?īack before computers and electronic banking, money management was more basic, but having a budget was still essential. With MoneyWell, there's one simple rule: Spend only what you have in your buckets. It's a broken system that most people can't use. We call this regret-based budgeting, where you print reports and then regret not sticking to your plan. Too many other financial tools rely on end of the month budget reports to keep your spending in line, but by that time it's too late to fix anything. The envelope budgeting method was chosen as the core design for MoneyWell because it is proactive budgeting-you first check that you have money to spend and then you spend it. At its core, MoneyWell is a budgeting system to help you eliminate debt and grow wealth. MoneyWell was designed from day one to do envelope budgeting-it isn't just a feature we tacked on as a checklist item. It also helps you direct your extra money to debt reduction and savings so you end up with a nice cash buffer for emergencies and a more stress-free life.
It's designed to keep you from overspending by using proactive budgeting techniques. MoneyWell is a personal finance package built around the concept of envelope budgeting.
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