One way to curb over spending is by knowing how to budget using the envelope system to organize your finances. Impulse spending wrecks your budget. Then you start robbing Peter to pay Paul. Your finances go down hill from there. You can stop this cycle when I show you how to budget using the envelope system.
Things You'll Need
- All of your expenses
- A pad and paper
- A calculator
Gather all of your expenses and list them on a notepad. You can also use your chceking account statement to hlep with this. If you don't have an accurate figure for some items try to estimate the amount as close as you can. Try to include everything you spend your money on.
Add up the itemized expenses. The total should be equal to or as close to your take home pay as possible. If not adjust one of the variable expenses (Gas, food, eating out, savings) that you estimated until the total is equal to or as close to your take home pay as possible.
Label your envelopes according to the expenses on your list. This system depends on you using cash to pay for everything. When you use cash you can see exactly where your money is going.
Cash your check and divide up the cash according to your listed expenses. Put the money for the rent in the envelope marked rent,the money for food in the envelope marked food and so forth.
Then jut pay for everything from the appropriate envelope. Once an envelope is empty you can't spend anymore on that category until the next pay period. You can borrow from one envelope to add to another but you sacrifice what's labeled on the envelope you borrow from. So don't borrow from the mortgage envelope! Make adjustments as you go. Over time you'll get a better feel for where your money is going.
It takes time and consistency to get your finances under control. Stay with it. You'll be glad you learned how to budget using the envelope system.