GLOSSARY · BUDGETING, SPENDING & SAVING

Envelope budgeting

Setting aside a fixed amount for a spending category at the start of each period, in cash envelopes, separate accounts or app categories, and stopping spending in that category when its amount runs out. It turns a limit into something visible and works by using mental accounting on purpose: money labeled for one use stops feeling available for another.

Also called: cash envelope system, envelope system, digital envelopes, cash envelopes, category buckets
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Latte Factor Calculator →What does a recurring small spend cost me invested, and how much does it delay FI?Paycheck budget →How should I split each paycheck between bills, savings and spending?
LEARN IT PROPERLY
CHAPTER · BUDGETING METHODS & FUNDAMENTALS · FOUNDATIONSEnvelope Budgeting With Cash or AppsCHAPTER · BUDGETING METHODS & FUNDAMENTALS · FOUNDATIONSChoosing a Budgeting Method That Fits
RELATED TERMS
Sinking fundMental accountingZero-based budget50/30/20 rule
SOURCES
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