It saves you from stressing out about how you’re going to pay your monthly phone bill or your electricity bill.
This money management technique has worked for me ever since I moved out of my family home at 18, just after I had my first child. It was my first time managing money and paying bills, so I needed a strategy.
It was my mother who suggested I buy envelopes, label each one for a different bill or budget and put money in it each week. It was the perfect way to visualise what I had and didn’t have, what I could spend and what I couldn’t spend. It saves you from stressing out about how you’re going to pay your monthly phone bill or your electricity or your weekly groceries.
So, I’m going to break it down very simply so you can apply this strategy for yourself.
- Step 1: Write down what you spend your money on each month. This could be bills, groceries, travel expenses, baby products like nappies, etc.
- Step 2: Get your envelopes and label them all with what you need to budget for. Include EVERYTHING! You will also need a savings envelope and a spending money envelope.
- Step 3: If your bill is monthly, divide the cost by 4 to get how much it costs you weekly and put it into the specific envelope. This means at the end of the month when you’re €60 phone bill arrives, you won’t have to find €60, which will be a big chunk of your money. You’ll have it saved up over the month!
For example, my Sky bill is €40 every month so I put €10 each week into the “Sky” envelope. My groceries are €100 each week, so I put aside €100 for that. My electricity is around €200 every 2 months, so I put away around €20 per week but for a bill like that, you’re estimating.
For this to work, you will need to be strict with yourself. If you’re short €5 for that makeup palette you have wanted for ages, do not take the money out of one of your envelopes, intending on “putting it back”, because chances are, you won’t. You can only spend what is inside your “spending money” envelope. In my case, I don’t have an envelope for “spending money”, I just keep that in my purse so I know any money I have on me, I can spend.
Ideally, you should be saving 20% of your weekly wage. To ensure you do this, put the money away into the correct envelope as soon as you get it! Don’t start spending and then put money away, otherwise, you may overspend and not have enough left to budget correctly. This goes for all your budgeting envelopes.
If you get paid into your bank, do not spend the money using your card. Withdraw the money weekly so you can visualise exactly what money you have. If you don’t want to do this, you can set up separate bank accounts, but this can be awkward, depending on how many things you are budgeting for.
Lauren Kennedy is a SAHM of two boys, a business owner and digital creator. She is the owner and founder of Books and Charmsand blogs at Harmonize. You can follow her on Instagram.