A variational approach employing localized functional is presented to solve alternating magnetic field problems with open boundary. The functional used in the approach consists of the domain integral of finite element region only and the boundary integral of the interfacial boundary between the finite and infinite element regions. The boundary integral is obtained by transforming the infinite domain integral for the infinite element region into the interfacial boundary integral. The proposed algorithm is then applied to a simple two-dimensional problem where the analytic solutions are available. It is shown that the algorithm makes it possible to yield good agreements between the numerical and analytic solutions. and that it requires less computer storage memory and computation time than the conventional finite element method due to the reduction of the computing region.