Monday, May 04, 2009

Envelope System

've always been very good about balancing my account, but never very good about not spending money on unnecessary items. My sister introduced me to the envelope system and it has already saved me a couple dollars. First step: make a budget. First I calculate how much I'll be spending on bills: credit cards, rent, utilities, etc. That money stays in the checking account. Calculate how much you can afford to save: transfer that to savings. Then I calculate how much I am likely to spend on other items. I've decided on a few categories: Dining Out, Groceries, Fun, Gas, and Misc. Make an envelope for each category. Decide how much money will be going to each category. I'm allotting $10/week for Dining Out (eating out and snacks), Fun (clothes, makeup, movies) and Misc. $15/week for Gas. Not sure about food, since I'm just getting out of college cafeteria living. I've tentatively placed that in the $20/week with plans to upgrade if necessary (I have a deal with my roomie for meals that we have together: he buys, I cook). Next, withdrawal cash and place the allotted amount in the appropriate envelopes. Last step, very important: Do not go over.

I feel that I will probably go under in some categories, then save up that money for when you really need it. For example, I might not use all of Dining out, but what I don't use each week can be saved for when I want to go to a nice dinner. At the end of the month, what I haven't used can be redeposited in my checking account.

I've just started today. I only had 3 envelopes and $2. I had bought a skirt for $8 the other day. So I placed the remaining $2 in Fun. I took out $20 from my checking account and placed $10 each in Misc and Dining. After I've spend some money, I replace the money with the reciept.

Today I spent $8 of Misc on keys ($6/2 keys) and cleaning supplies ($2). I spent $5 of Dining on snacks at Circle K for Boyfriend. (I'm so nice). I don't count the change. I've I have change in my wallet, then I only write down the lower whole dollar amount. Example: the two keys were actually $6.26, but I had some coins on hand. If I hadn't, I would've spent $7 on the keys and put the change in my change purse.

How has this saved me money already? I was at Lowe's getting my keys made and Wal-Mart is right there. I thought I would pop over and pick up some envelopes, since I only have 3. But then, I thought, I only have $2 left in Misc. I'll just see if I can get some from the secretary's office tomorrow. So, a few of my envelopes will have BAC logos on them ^_^ Also, they will have been free!

I hope this works out and I keep it up. It's a great way to save money!

Other ways to save money:
Clip coupons: If you can save an average of $1.50 from the coupons you've clipped, then you've gotten your paper for free. Beware: don't be tempted to buy the name brand item just because you've got a coupon. Make sure you're actually saving money! There are very few items for which I demand name-brand (Special K and Crystal Light are two.) For everything else, check and see if the off brand isn't cheaper.
Cut and Dye your own hair: this isn't feasible for everyone, but I cut and dye my own hair. I'd do Boyfriend's, if he let me.
Bike around: Bike to work! If you live too far away to work or, like me, have to take the highway to work, instead, use a bike for other trips, like to the store.
Thin out the drinks: adding water to milk and juice can really stretch them! Especially if you drink juice like it's going out of style (like I do!). Just be careful not to over do it.


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