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Wednesday, April 3, 2013

Envelopes for Financial Management

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Envelopes made by Anna and Anis. Thank you.

Instead of bringing your wallet full of credit card when you go shopping and you end up spending more than your budget, you can bring something like the picture above. It is made of 6 envelopes bounded together.

At the beginning of the week, you can allocate money for:

  1. Grocery shopping
  2. Transport (petrol, tickets)
  3. Dining out
  4. Bill payment due that week (utilities, school fee, etc.)
  5. Fun or entertainment (movie, book, magazine)
  6. Emergency fund

Put the budgeted money into each envelope.

Whenever you buy something or pay something, use the money from the appropriate envelope and put the receipt into that envelope. Basically you exchange the money with receipt.

When there is no more money inside the envelope, it is a sign to stop shopping. Remember…no cheating! Do not move money from one envelope to another.

At the end of the week,

  • You can use the receipts to record your expenses for the week
  • Any money left in the envelope, you can either save them (recommended) or you can use it for the following week

It is a simple and practical way to manage your finance.

If you use similar methods, please share in the comments.

Learn and Grow!

Inge Santoso, B Com, CFP®

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