We Pinays are no stranger to the concept of budgeting. The downside is, only a few are able to implement this system in their households. If you want to finally be able to discipline yourself in terms of budgeting, try the envelope system.
Start Even with Zero Savings
The Envelope System does not begin by saving up some money. So, even if you have nil savings, you can begin using this tool. To practice it, let’s have an example –
Say you have a monthly budget of 5,000 Pesos for your groceries. As you withdraw from your payroll account on the 15th of the month, make sure to get only 2,500 Pesos. Put the whole amount in an envelope marked as Groceries.
Discipline yourself to never – EVER – get money from that envelope save to pay for grocery items. Even when you unintentionally left the envelope during food shopping, turn your car around, go back to your home and get the envelope.
Be sure to take ample money to cover the items that you will buy from the grocery store during that trip. If you took 1,000 Pesos and the total bill went up to 1,200 Pesos, then you have to put back some items. If, however, you were able to save and still have change, then be sure to put it back into the envelope.
On the 30th, when you get paid again, be sure to set aside 2,500 Pesos once again. This will cap the 5,000 budget for groceries for the entire month.
If you are aching to go to the grocery store and the envelope lacks funds, then it is better to seek leftovers inside your fridge.
Use this envelope system for the things that often bust your budget such as groceries, entertainment, restaurants, clothing and gasoline. When money runs out of the envelopes, do not spend anymore till the next month when new money will go in. Also, you are not compelled to spend every peso from an envelope. Any leftover money is considered savings or your Reward Fund.
Also, you are not compelled to spend every peso from an envelope. Any leftover money is considered savings or your Reward Fund.
Because “You Soooo Deserve It”
Once you get the hang of it, you will soon realize that more money is left inside every envelope each time. For this, you have reason to celebrate (just make sure you do not splurge, though).
If you want to, reward yourself by having dinner in a restaurant or by rolling over the extra money to the food budget for the next month. You are sure to feel happy once you see a bigger food budget.
It is also important to reward yourself now and then so that you will be motivated to keep up with what you are doing. It may be tough to do this at first but know, dear Pinay, that you can make it work!
Make sure that you never borrow from any of the envelopes. For instance, it can be very tempting to take cash from the envelope labeled “Insurance Budget” when you fall short on your grocery money. Keep in mind that the purpose of this system is to curb your ruthless spending habit. The Envelope System was created to teach you discipline. If the money that you have is slipping more quickly than the month’s remaining days, then limit your unnecessary expenditures.
Keep in mind that the purpose of this system is to curb your ruthless spending habit. The Envelope System was created to teach you discipline. If the money that you have is slipping more quickly than the month’s remaining days, then limit your unnecessary expenditures.
If, however, you experience some kind of crisis in the middle of the month, then this is the only time that you can shift some envelopes around. Shopping for a new pair of shoes is not considered a crisis, okay? Adjust the budget and make sure that every family member agrees with it – always make it a committee decision.
Adjust the budget and make sure that every family member agrees with it – always make it a committee decision.
The Envelope System is a powerful tool that you can use to hamper unnecessary expenses. But at the end of the day, remember that this system is just a method. There is one other aspect that has more control than this mere tool. The most powerful part of the system is still – you.
This author and her family is a strict practitioner of the Envelope System. As a family, we were able to conquer our weaknesses in terms of spending, plus, we got to pay off a number of debts (that had been in our pipeline for the longest time).
Finally becoming the master of money instead of its slave is a wonderful feeling. Bills no longer bug us because we know that there is money that has been set aside to pay them. Sure, we still have a few obligations but now we know that it’s only a matter of time before these, too, will vanish.
We encourage you to do the same and feel the same.
Stop dreaming of SAVING. Begin saving today for as low as P75 per day. Get a free quote here,. schedule a free financial training for your group or company or call the Peso-Pinching Pinay herself —