What is the envelope method?
The envelope method is as simple as it sounds - it is a way of budgeting that requires you to put allocated funds into specially marked envelopes. This system has been around for years, but is always being revamped to suit new trends. For those new to budgeting or who have found other systems to be ineffective, tedious or complicated, the envelope system is ideal!
Why should I try it?
If you find yourself overspending, running yourself into debt or need to save towards a goal, you have to budget. With the envelope system, you have very clear line-of-sight on how much you’re allocating to each aspect of your budget as well as how much is being spent. This allows you to reign yourself in, if you seem to be overspending.The envelope system is also a great way to control your spending during special occasions such as holidays, trips or big events. You can set aside money based on expenses you think you will incur during this period and only spend those allocated funds.
Before getting started, look back at past spends to get an idea of your previous spending habits. Take this time to re-evaluate your spending habits by asking yourself:
Remember, just because you’re spending on it does not mean you NEED to be. You can make lasting changes to your spending by making simple changes. For instance, instead of spending $700 on buying lunch, you could save $300 by using items you have at home to prepare your own. Go through old receipts and identify the areas that need serious adjustment, and make realistic changes
Once you have an idea of what areas you need to budget for, start labelling your envelopes. Some general areas to include are:
Try to include ALL areas where money is being spent. The idea is not to reduce your quality of life, but rather to improve it by improving your spending habits. After identifying these areas, start to allocate money based on the information gathered through your previous assessment. Be realistic. After assessing your past spends, you should be well-informed and able to set a realistic budget. Avoid setting it higher ‘just in case’. The system only works if you intend to stick to the budget given.
How to make it work for you
While it is important to set a realistic budget and not one that accommodates the ‘just in case’, it is also important to assess the budget you’ve set. A simple way to do this is to collect all receipts, where possible, and add them to the assigned envelopes. At the end of your budgetary period (weekly, fortnightly or monthly) evaluate your spending habits. As tempting as it might be, avoid pulling money from another envelope. If you properly track your spending, you will quickly see if you are running low in an area and be able to make changes to keep within your budget. During evaluation, you can better see where general adjustments need to be made. Perhaps your original budget was not realistic enough. If you find that you under-spend in an area, you can add that extra money to your savings or reduce the allocated funds the following month.
Don’t be hard on yourself if at first it takes some getting used to. The system works only if you make it right for you, and this might require some trial and error. Give yourself three months to properly get on track and hold yourself to that deadline.
It was one of those epic days. A regular Wednesday that had been preceded by an average Tuesday. Tuesday night’s musings sounded so optimistic!
Ok, tomorrow I’m going to wake up early, make baby’s porridge, head out before the traffic hits and make it to the office in time to print the documents for my 9am meeting so my boss won’t even know I didn’t leave them on his desk from tonight.
Ah Tuesday if only you knew.
Wednesday morning dawned and appeared to be normal. What did I do? Miss the alarm. Yup, so I woke up late. Baby woke up miserable from teething. Made the porridge and watched the slow motion action of the entire pot falling off the stove. Cleaned up. Made the porridge again. No time for breakfast: grab a Malta and rushed to the car… The car that decided it was not going into reverse today. Fiddled with car (read: curse, pray, plead, slam the lever back and forth from park to reverse until the transmission engaged). Finally got it moving and head out: into traffic. One hour into the should-be-20-minute commute I got cut off by a CUR, slammed on my brakes and the entire bottle of Malta overturns directly into my company issued laptop. I pull off the road to clean it up, salvage it as best I could. Called my boss, called the mechanic, skipped the meeting, went straight to the mechanic where he promptly told me he can’t take the car till Monday and I should budget J$100,000 to get it fixed. Like what the actual F!!! Got to my desk and realized meeting ended, nobody took notes so there are things to be done but nobody knows for sure what to do and who is responsible. Took two pointless phone calls and realized I’m still in crazy mode (I literally told a manager who asked me a dumb question “how are your parents? When was the last time you visited them?”).
I fight to centre myself. Shake this mood, shift my energies so I can make it through the rest of the day without committing murder… because I have a kid, and moms who murder are frowned upon. I go to the bathroom and stretch, whisper my gratitude affirmations “I am grateful for my job, I’m grateful I’m alive; Im grateful for my child”… They. Are. Not. WORKING. I pop in my earphones to do a quick meditation… Nothing: I’ve used up all my data and there’s no wifi on the building. Sigh
As I walk out of the bathroom still seething about my stress level the midday news is on the television and every story is about devastation: earthquakes, hurricanes, Donald Trump. It suddenly strikes me that I have a choice. I can dwell on my issues which felt overwhelming only seconds ago or I can pause, take a deep breath, find one positive thing to hold on to and start all over again. Just one thing. It doesn’t have to be a huge, life altering thing. It doesn’t have to be the things that interviews with Oprah are made of. It doesn’t have to be spiritual and high level. It doesn’t have to prove anything to anyone else. It just has to be enough to hold on to, just to get you through the next moment.
I’m sitting at my desk. 1:22pm, as I sip my coffee I realize, in this moment I’m truly grateful for Coffee and that’s ok.
Natalie is passionate about learning and believes she should leave everyone she encounters a little better off; so she brings love, light and good juju wherever she goes. Managing Partner for NC3 Events, mother to one, friend to many, she fiercely defends the 'no-judgement zones' she creates for her loved ones. She loves to read; and so she writes.
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