Often, when you cash a check through a bank, your money is given to you in a cash envelope. People used to spend the money in this envelope wisely, knowing that there was no more money until the next payday. They physically could look and see how much they had left everytime they shopped or thought about shopping.

So rarely do we sit and look at our checking register before we whip out a plastic card or a pen. The envelope system of budgeting works for many people. It uses the tried and true method of physically seeing your dollars to determine your spending.

First, you sit down and budget out your spending. You can use one of two methods:

In method one, you label an envelope for each expense. Be sure to break down your yearly bills, such as property taxes or insurance premiums, into monthly allotments. Each envelope will have an amount on it that you will place in it each month. You can substitute envelopes for several coupon organizers. Designate one for bills, one for debts and one for monthly spending. This method works well for those with few bills.

Method two takes into account that many payments come directly from your checking. On paper, you will account for each bill that you pay during the month. This is your bill paying guideline. Simply keep a notebook with a page for each month with each bill listed. Mark them off as you pay them. You can total each months bills in advance to help determine how much you have to go in the envelopes.