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Create A Easy Cash Budget,

It's not crazy at all, it's an old and proven way to manage your money. Because this is actual money, paper and coin, you will feel much closer to your cash budget, in a literal sense, and you'll quickly find that your level of interest and commitment to your budget are far greater when you were using something as ephemeral as a credit card for purchases.

This is an incredibly simple system with almost no upfront expenses, let's say under twenty five dollars to get you started.

So what will you need to get started with your cash budget? Just three items and you may have these already.

First is to buy a box of business-sized envelopes, a notebook of any kind and some pens or pencils, and a small fireproof safe. These are in the office or stationary section of your local large department store. Know where I am heading with this?

Yes, it's the old envelope system of budgeting your cash! Maybe you've heard of this from your grandpa who lived through the Great Depression or an older friend or relative who lived on a farm and didn't trust banks. Well, it's back and thriving, truly helping people stay within their cash budget and learning how to manage their own money!

Before you can fill your envelopes up with cash, you'll need to sit down with your notebook and pen and list all your monthly bills, annual bills, medication costs, grocery costs, vehicle expenses, entertainment and any other expenses that you have. You can use our free budget plan worksheet if you would like.

Don't forget those yearly expenses like property taxes or insurance payments. Think hard, keep the list going for the day, come back to it when you remember something else.

After your list is complete, it's time to set monetary amounts to each item on the list of your cash budget. This is a perfect time to consider where you can cut back in your budget.

Don't cut back too severely the first few months, you don't want to feel like you are punishing yourself and then give up your budget in frustration. Just try to come up with a money saving idea or two each month and stick with it.

It will start being fun coming up with new saving ideas and trying them out. Practice some energy saving habits, turn the lights off, unplug unused TV's, turn the thermostat down one degree in the winter and up one in the summer.

Just start out simple and easy. Dust off that library card the first month, most libraries have a great selection of movies along with books, and they are free! Use your calendar to mark down when everything is due to avoid late fees.

Check out local parks and take walks, these relieve stress and increase your level of health along with saving money. If you've never done it before, just as an experiment, go find your local thrift stores just to see what they offer. You'll be amazed! There are plenty of people who never ever buy new clothing, curtains, dishes, games or any of the hundreds of other offerings in thrift stores.

Again, don't force yourself to do too much too quickly, think of this as an adventure, be creative, get into it. Attitude can make an amazing difference when you are learning to live on a budget.

OK, you have your creative thinking going now! It's time to actually get that budget down on paper. From your initial list, we are now going to make an organized list of expenses on a second sheet of paper.

Make headings that fit your expenses. Home Utilities , insurance, medical, groceries, credit card bills, entertainment (hey, now this will be a little less than what you've been spending won't it?), continue making your master list headings.

Then put each item on your original list under the appropriate headings. Some items may have only one item under them, that's OK, this is your customized budget we are working on, and it has to be realistic for your situation.

No, we haven't even started the envelopes yet, we're still working out that budget! As you look at the cycles of incoming money, you will be determining how often you fill the envelopes.

Twice a month is great for those who get paid roughly twice a month. Once a week works best for those on that pay schedule. It will be very important to get that cash into the envelopes quickly after payday.

You don't want to tempt yourself with a loose wad of cash and ruin your budget! So, our goal now is to simply write down on the list weekly-in, twice-a-month-in or whatever will work best for you.

It's finally time to get to the envelopes. One simple rule here- keep each envelope very specific. Avoid writing Utilities on just one envelope. Break it down, water, gas, electric, phone, cable on their own envelopes.

The more specific you are the more likely you will have a smoothly working system in place. If you lump several expenses together you risk running out of money in that envelope for the last expense of the month or week.

Groceries should be considered as a weekly expense. This envelope may be the one you use the most often.

Entertainment and vehicle expenses need to be watched closely in the first few months to make sure you are budgeting the correct amounts and sticking with these amounts. They may all be weekly envelopes depending on your lifestyle.

Remember this cash budget system is customized for YOU. So, be realistic, base it on what you really do. If you only shop for groceries once a month, then of course this will be a monthly envelope. So label your envelopes with the expense and the amount of the expense using your system for whether it is a weekly or monthly expense.

Break down the annual expenses like property taxes into a monthly amount. Only on these annual envelopes should you need to put a little checklist, list the months and check them off when you place the allotted amount in the envelope each month. Look what you have accomplished so far! Creative thinking about lowering your budget, an organized system for paying expenses developed, a thorough knowledge about every expense you have and the amount of incoming money to cover your expenses.

Did you do the math to make sure your cash budget fits what you earn? Go back and adjust flexible expenses at this point to make it fit. We are dealing with cash not credit here, and it's all important to be completely realistic about this cash budget.

For a brief moment now we are going to talk about safety. Remember that fireproof safe I advised getting in the beginning of the article? Now's the time for you to find a secure place in your house to put the safe. This is where your envelopes will be placed so don't lose the keys to the safe if it has a key lock.

Furthermore, be aware that these are small and portable and not theft proof by any means. They are meant to preserve the contents during a fire. So find an; out of the way spot to put your safe and don't talk about where it is with any more than just one trusted person.

Never keep your cash in a drawer or near jewelry or other valuables. Find a kind of off-beat place, out of sight, tucked away.

One important envelope we will add at this point is Unexpected Expenses. Think of this as your insurance policy on your cash budget. In the first few months, you may find an envelope runs out of cash before the next time you add to the envelopes. This is the [only] envelope you can dip into when this happens.

Never be tempted to pull money out of the gas bill to pay for a movie. The only envelope for this will be your Unexpected Expenses envelope.

Ready? Yes, you are! We have covered everything to get you started with your cash budget. Now it is time to put it in place. Expect a few problems the first couple of months, this is a new system to you and you will have several areas that may need tweaking to make it a perfect fit for your finances.

Several final tips before we end. First, when you withdraw money from your envelops, be sure to work with exact amounts. Have change ready so that you are taking out only what you need, not more. As you perfect your system, continue coming up with creative ideas for cost cutting, make this an adventure.

You will be amazed at how you master your budget, you own it. When working with a cash budget each expense and earning takes on a whole new importance, it is physically passing through your hands. Before you know it, you will be creating a new envelope called Savings!

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