With the popularity of budget guru Dave Ramsey at an all time high, it’s hard to live in the information age without at least hearing of the envelope budgeting system. But in the event you’ve lived outside the reach of this ingenious brainchild, let’s spend a minute to recap it.
The envelope budgeting system is based upon a simple, if not impractical idea of taking one’s paycheck and turning it into cash. The budgeter takes these dollars and distributes all of it into multiple basic envelopes that have been hand labeled with customized categories such as “food”, “entertainment”, “household products”, “clothing” and “savings”. This method’s undeniably effective results are produced from the visual, tangible reminder that there is only so much money to put towards those expenses. If you have to spend more, you are required to dip into another envelope for the money. Countless sites online that recite this approach in varying degrees of supporting detail, but you get the idea. And why is this method getting so very much attention from all the online frugal bloggers? The answer is easy, because it works.
But in a world that is constantly moving further away from using cash, is there a way to still benefit from the powerful message this seemingly archaic, cash-based system delivers?
The answer is yes.
Mvelopes is one of those products. Mvelopes has developed an online tool (no download required, accessible from home, work or mobile phone) that replaces the need for the manual handling of cash by creating virtual envelopes that convey the same perception altering results that as their physical counterpart. In addition, Mvelopes inherent another budgeting tactic by employing this approach; zero-based budgeting. Zero-based budgeting is named such due to it requiring one to spend all income first “on paper.” Giving every dollar a task is another eloquent and proven way to take financial control.
When searching for ways to make ends meet, keep focused on what is important. And that is:
- Living on what you earn
- Getting yourself off the paycheck to paycheck cycle
Once you cut through all the marketing, the most effective personal finance software tools are ALL built upon this concept. Resist the urge to be unduly influenced by flashy interfaces and less critical functionality. Remember there is nothing special about a screen that display the results of your prior month’s spending compared to what was budgeted (even an Excel spreadsheet can do that). The budgeting software you want is the one that will actually help you succeed at those two objectives.
And Mvelopes is a great tool that can do just that. Read my complete review of Mvelopes.