Dave Ramsey's Envelope System

 Hi All,

Lately, I have been searching a lot about frugality and saving money as I want to be more savvy with our money. I am a fairly minimalist person without any bad spending habits, or so I think. Yet, I am struggling with finances. Mostly because we have no budget system and do not know where our money is going. 

Hence I  had been looking for a really very simple budget system and came across The Envelope System. It is a super simple way of budgeting that appealed to me. It is something that our grandparents would have done yet I feel it is very practical. 

How the envelope system works:

Here are simple steps you need to follow -

1. Set a budget for the month. E.g: you are going to spend Rs 10000 on grocery, rs 5000 on eating out and rs 5000 on miscellaneous

2. withdraw the amount. In this case Rs 20000

3. Take 3 envelopes . Put rs 10000 for grocery in one envelope and rs 5000 each in the other 2 envelopes for eating out and misc. 

4. Use only that money in the envelope for what it's supposed to be used. If the envelope is empty before month end, do not withdraw more. make do. 

The simplicity of this method really fascinated me so I am trying it out this month. 

My envelope system:

Below are the categories for which I am using this system

1.Grocery: 8000

2.Doctor: 5000 ( I am expecting, so doctor's visit is frequent)

3.Pocket money: 6000 (for 2)

4.Eating out: 5000

5.Hospital Bag: 5000

Total: 29000

I am starting this from July. Let's see how it goes.