Reader,

A lot of people who say they have a budget mean something like,
“I keep an eye on our bills, make sure we’re not spending more than we earn, and pay off the credit card each month. It runs in the background, and it works. We’re good.”

And while this is a solid place to be, but it's not the kind of budgeting I teach.

What I teach is a zero-based, digital envelope system.

Zero-based just means that when money comes in, you give every dollar a job by assigning it to an envelope (or category). You actively decide, okay, these dollars are for groceries… these are for my vacation next spring… these are for Starbucks… and so on.

Before you spend, you check that specific envelope, just like you would if you had a real envelope of cash in your bag on your way to the store. You can move money between envelopes any time you need to, and when more money comes in, you assign that too. Nothing gets left sitting in your account to “figure out later.”

It’s specific and flexible. It gets everything out of your head and into a system that helps you look at your dollars and decide what you want them to do before they do it (i.e., before they get spent). It’s built on math, not emotion.

I use the tool YNAB to organize everything, but what I’m really teaching is my take on envelope-style budgeting.

Allegra