Now, some of you have no problem using a debit card and staying within your budget guidelines but for those of you who are concerned about overspending in a particular category, let me give you a couple of tips and tricks. First, if you are not currently on a monthly budget plan with your utility companies, I highly recommend you call them immediately. I live in a part of the world that has four seasons. My electric bill is far more expensive during the summer than it is during the winter. Rather than try to manage the uncertainty of a monthly bill, simply request to be placed on a budget plan. Yes, my electric bill will be a little higher during the winter, but it will also be lower during the summer.
Another cool tip I learned from a friend. This seems so simple but honestly, I had never considered it before. It works great for him, so I want to share it with you. He has his bills setup on a monthly budget as suggested above but he takes it one step further. Since he receives a weekly paycheck, he divides his monthly bills by 4 and pays them weekly. That takes some straight-up discipline right there but hey, I think it is a great idea especially if you struggle with saving money until the end of the month when your rent is due. His rent is $500/month. He literally sends his landlord $125 every week. I love it! And there is a BONUS if you choose to implement this discipline; if you pay your monthly bills weekly using 4 weeks in a month you will actually have 4 paychecks every year that you can spend any way you please! That’s right 4 weeks times 12 months equals 48 weeks. Since there are 52 weeks in the year, you have 4 extra paychecks! This strategy will not work for everyone but if it works for you, knock it outta the park!
Don’t despair. I have another trick up my sleeve that will work for everyone. It’s called the Envelope Plan. I don’t know if my dad came up with this or if someone shared it with him. All I know is he shared it with me, it’s quite simple and it works. My dad always encouraged me to use cash because once it’s gone, it’s gone. The Envelope Plan employs this principle. If you don’t have access to envelopes, you will need to purchase some. I recommend the Dollar Tree where you can get everything you need for $3-$4. You will need 10 larger envelopes and 25 or so smaller ones. Your budget categories look like this (larger envelopes).
Your budget subcategories look like this (smaller envelopes).
Feel free to customize your subcategories to meet your personal needs. Some of you may want to utilize this tip for every expense while others may choose to use it for specific categories. The bottom line is this. Go to the bank or ATM and withdrawal cash. Place the amount you have allocated for that particular expense inside the envelope. When you pay for something in that category, use the cash that is inside the envelope. That’s it. What if there isn’t enough cash in the envelope for your purchase? Remember, you can’t spend what you don’t have! You have 3 options: 1) put something back/reduce your purchase, 2) wait/save your money until your next paycheck then make the purchase or 3) if you can responsibly move money from another category, you can withdrawal the cash from one category and add it to another.
Once you have all of your subcategory (smaller) envelopes set up and funded, place each envelope into its corresponding category (larger envelope). Then, you will need to place the larger envelopes in a very safe place. Consider using a locked file cabinet, fire-proof save or other secure location within your home. NOTE: I do not recommend you publicly share that you have envelopes full of cash in your home!