For the purposes of our discussion in this series of savings tips we want to talk about using the Envelope Method for each of your different “discretionary” spending categories and dividing up that cash into labelled envelopes for those expenses. You may pay your other usual expenses via efts or online banking etc but for your discretionary items you use cash.
What is good about using this method is that once you’ve spent all the cash in a particular envelope, you can’t spend any more in that category until the next month. This method helps you stay on track with your spending and encourages you to be a lot more mindful of your expenses. As you watch the amount left shrink you will find you will naturally slow down and start to consider what you really do and don’t need.
Imagine having a specific amount of cash set aside for things like going to the movies, eating out with friends, or pursuing your hobbies. With the Envelope Method, you can do just that! First, determine how much money you want to allocate for each discretionary spending category. Then, put the cash in separate envelopes labelled for each category.
For example, if you decide to allocate R250 for entertainment, put R250 in an envelope labelled “Entertainment.” Then when you head off to the movies, half that money disappears leaving you only the other half to spend over the next few days/weeks. Once you’ve spent all the cash in that envelope, you can’t spend any more on entertainment until the next month. Sorry. You have to find free things to entertain you until then.
This method puts a tangible limit on your spending and helps you prioritize your expenses.
The Envelope Method can be especially helpful for those who struggle with impulse spending or have difficulty sticking to a budget. It forces you to be more intentional with your spending and encourages you to think twice before making a purchase. When you can physically see how much cash you have left in each envelope, it’s a visual reminder of how much you’ve spent and how much you have left for the month.
The Envelope Method can be especially helpful for those who struggle with impulse spending or have difficulty sticking to a budget.
It also helps you make conscious decisions about how you want to allocate your funds, as you’ll need to carefully consider your priorities and make choices based on what matters most to you.
By using the Envelope Method, you can gain greater control over your spending, be more mindful of your expenses, and ultimately save more money.
