Saving To Go With A Cup Of Joe: Envelope Savings Systems!


Good morning, savvy savers! Today I am starting another new savings series! I would like to introduce you to, Savings On The Go With A Cup of Joe! Each Tuesday I will be discussion a different savings secret, trend, or personal implementation! Why the Joe? I need my morning coffee, and I thought that discussing finances with the world required a cup of coffee! This morning I will be discussing my personal envelope savings system!

So to begin, I started using an envelope savings system because on average I found myself overspend by 15% or more, weekly, when my family and I did not use cash to pay for purchases; credit cards, and debit cards for that matter, often mean more debt for me! Like my family, until a year ago, did not have a savings plan in place and that was a huge issue for us! Only a small percentage of families have a system in place to help control the household finances. Using cash to pay for purchases, by way of an envelope system, is a very simple and effective way to control spending, and it has worked well for us.

1) It’s easy to set up the envelope system. Simply put, make a monthly budget, including money for savings, and once your bills have been paid and allocated, withdrawal cash equal to the amount of what you have planned to spend for gas, groceries, parking, hair appointments, and incidentals.

2) Decide as a family what categories of spending you are going to put on a cash basis. Some might prefer to put all of their expenses on a cash basis. For me, cash is always used for food, clothing, gasoline, auto repairs, toiletries, cosmetics, hair care, stockpiling, weekly deals, and mad money.

3) Invest in a pouch to use as your envelope; try the Dollar Tree for such options!

4) Label your envelopes. Get several standard letter size envelopes, or pouches and label then for certain expenses, if you will use them for bills, such as the water company, electric company, or the like. Then create envelopes for personal funds, or group funds, as specified above. I generally use one envelope and break up stacks with sticky notes and paper clips!

5) Once your envelopes are labeled, decide how much you plan to spend on each expense for that period; making sure to go back through and write those amounts on their corresponding envelopes.

6) Be sure to store your envelopes in a safe place. I purchased a $10.00 lock box at Walmart for this purpose and the only two people who have access to place or remove envelopes are the two people who create the funds, my husband and I!

7) Being successful at handling money takes planning. The envelope system is extremely powerful but it is only part of a good financial plan. To effectively manage your personal finances you should also include a monthly budget, spending plan, savings plan and debt reduction plan. Also, be sure to keep your receipts!

8) Remember, when you run out of funds, that’s all you can spend!

I know this list sounds harsh, but trust me, you will save greatly, largely, and quickly! This is the only way I have found to effectively spend money in an effective, accountable manner!

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