Money talks: stick to the ‘envelope system’ | Josephine
Money… that’s what I want. A lot of money.
Having money can make life more comfortable, but it can also make life more difficult. There’s a reason there are so many famous songs about money, including “Mo Money Mo Problems”, “Money For Nothing”, “It’s Money That Matters” and “Money Changes Everything”. These songs can be really catchy, but they are also rooted in the truth.
Over the years, my relationship with money has taken different forms. I thought I had a good idea of the expenses when I went to college, but when my paychecks didn’t go any further in the month, I had to make changes. It was a difficult lesson to learn, and the changes didn’t happen overnight.
I had to budget and stick to it. I can’t count the number of times I’ve failed at this. I felt like no matter what I did or what I changed, I still had a hard time keeping up. After an unexpected change in my life, it made me reevaluate a lot. While I hope you don’t have to lose someone to revive you, for me it is. One of those changes was to tighten my purse strings even more. I have developed an envelope system that has worked for me over the past four years and has changed my perspective and my relationship with money.
Changing your consumption habits is not easy. It takes determination, dedication and discipline. You have to want to make the change, like everything else in life. No one else can make you change unless you want it for yourself. It’s a hard lesson, and sometimes I slip, but I grace myself and get back on the path right away. If I want to accomplish things in the future, I have to be prepared to make sacrifices now.
The first thing I did was make a list of the things I want to achieve – future goals that I will only achieve if I stick to my budget plan. Some of them include: paying off my student loans, paying off my credit card debt, having six months of savings, buying a house, building a house after my first house, starting a business, etc.
The next thing I did was do a spreadsheet budget of all my bills for each part of the month. Because I get paid twice a month, I divide them into payments for the first half of the month and the second. If you get paid weekly, I suggest you break it down into weekly buckets. After paying the required bills, I take the rest of the money and divide it into savings and spending money. Depending on the time period of the money, the savings may or may not be a larger or smaller amount. Pocket money doesn’t change unless I have specific plans.
I divided the spending money into three categories: groceries, gasoline, and extras. Groceries and gasoline are fairly easy to explain. Part of saving money is not going out to eat as much as we would like. I love trying new restaurants, but I can also cook delicious meals at home for a fraction of the cost. I have also started to prepare meals and plan what I want to do for the week. Having a grocery list prevents me from purchasing additional items at the store.
The extras category includes dining, going to the cinema, shopping, etc. This change was not easy. Running through the drive-thru for an iced tea or a quick bite to eat is so easy, but it adds up, too. Sometimes I looked back through receipt month and thought, “OK Melissa, you could have done better,” and then the next month I try to do it.
A big part of how well envelopes work is that I use all the cash for my expenses. I know, in a world where swiping a card is so easy, going back to the Stone Age seems weird, but it really makes a difference. I go to the bank twice a month and withdraw specific amounts, dividing them into two-week periods. I have the envelopes in my wallet and when I go to a specific store I take out the respective envelope to pay. If I empty this envelope for this time of the month, that’s it.
It wasn’t perfect at first. I had to make some adjustments to make it work. Sometimes the groceries are overflowing, so I borrow gasoline. The first few months were testing to see if I could make it on the amounts I planned to spend. I adjusted until I found what worked for me, so I was still making progress in my savings, I could live comfortably but also make changes to build a better future for myself.
Some of the things I have been able to do since these changes have been pay off my car, pay off half of my student loans, pay off half of my credit card, and I was able to buy my first home. I still have a way to go to achieve some of my goals, but I’m one step ahead of who I was or thought I could be.
This system is not for everyone. I have shared this and my spreadsheet with friends and family who have asked about it. Some have used the ideas, some have not. For me it works. Although I still depend on money to survive (as we all are), I created a different and better relationship with him. Money is a vessel for the future, and it no longer has a hold on me. It’s okey for me.