Topic: Budgets - saving money
I divorced in 1992 -- up until 7 months ago, I lived completely hand to mouth. No savings, no hope of savings - somehow my money from each paycheck just was too short. I would merrily write checks and then -- gleep -- I had spent everything.
Then a good friend of mine, having hearing me lament yet again about my finances and how I was eating into the next weeks paycheck to pay my rent etc., suggested ... ENVELOPES.
What? He said during a financially bad time in his life, he resorted to envelopes.
Here's the deal -- work out EXACTLY how much your rent/mortgage is. How much electric/gas -
telephone. Credit card payment etc.
Total that up for the month and divide by the number of paychecks per month you receive (weekly, biweekly etc).
Keep THAT amount of money in your checking account (if you have one) and cash the rest of your check. Keep ONLY in the bank what you pay each month by check.
Now -- take the cash and put it into DESIGNATED envelopes. To give you an idea of my envelopes --
Savings, loan payback to my sister, pet food, my food, gasoline, entertainment ($8.00 per week)
nicorette gum (I quit smoking), my Blood pressure medication etc etc etc
On each envelope I put what it is ... ie Food ... and my monthly amount/weekly amount in the left hand corner.
Since I get paid by the hour and can work lots of hours or a few -- I then had a REAL idea of how much money I need to fill my envelopes and have the money set aside each week for rent etc when due.
It takes about a month to get the whole process to work but it's INCREDIBLE!!
For the first time since my divorce well over 10 years ago -- I have money saved. I added an envelope for Christmas ... I add envelopes as I see the need for them and eliminate envelopes as I no longer need them (ie the nicorette gum envelope).
Some weeks I cannot fill ALL my envelopes BUT I ALWAYS fill my savings envelope and my sister loan envelope. I might have to skimp on food or pass on entertainment ...
BUT -- when I went Christmas shopping I took my Christmas envelope. It was like shopping with FREE money. Didn't touch my savings, didn't put anything on credit cards.
It's a baby system -- not high finance but boy does it work. And if you can do without a checking account at all -- just make an envelope for your rent etc.
Try it -- I've gotten a few friends onto this system and they love it.