A Recipe

Ingredients:

a dozen or so envelopes

a box to fit said envelopes

a pen

a paycheck, regularly (preferable)

your debit card

a pair of scissors

Directions:

Make a list of your expenses: gas bill, TV, Cell phone... student loan payment, credit card, rent... doctor co-pays, toiletries, clothes... Don't forget things like "haircuts" and "vacation" and "gifts"- places you spend money once or only a handful-of-times a year versus once a month, or once a week.

On the upper corner of each envelope write an item.  

In the box place the envelopes for the expenses that you don't need to carry around with you.  For example, you probably don't need money for furniture on you at all times, but it's probably a good idea to have your grocery envelope in your purse.

When you get paid and the check goes into your account, you remove that exact amount in cash.  (If your bank requires a minimum balance, keep that amount in there and remove the rest).  Take your wad home and distribute the money into the envelopes.  Start with immediate necessities and work your way back.  On the envelope record what you've deposited and on what date.  

When you need to pay a bill, take the cash out of the corresponding envelope, deposit it and pay your bill.  Note on the amount you've taken out of the envelope and the date.

The next time you get paid, repeat the process.  

Come the holidays, you will have a small savings devoted fully to buying gifts.  Every six to eight weeks you have exactly what you need to pay- in cash- for your hair cut.  

Then take your debit card and pair of scissors and cut it in half.  Ok, no need to be dramatic.  Keep it but don't use it.

This is a recipe for getting in close touch with your money.  You will see, touch, distribute, spend exactly what you have and not a penny more.  You will realize you can't buy something if the fund is dry- or you will realize that you should start depositing more money into one envelope rather than another.  

It's called "the envelope system"-- it's how my grandmother used to do it- and she was a very successful businesswoman.    This guy does it too.  

Happy saving!