When compared to texts and emails—sent and received within seconds — snail mail is a thoughtful expression of affection from friends and family. So nicknamed because of how slowly letters move through the postal system, snail mail is a rare occurrence, giving you very few occasions to address an envelope and slip it into a mailbox. But there’s more to those blank envelopes currently collecting dust somewhere in your home. They are a secret financial-fixing tool.
Every financial fix starts with a budget.
There’s no sugar coating it — making and following a budget isn’t fun or easy, but it’s a necessary step if you expect to stay out of the red. It does that by forcing you to think critically about how you spend your money. Only once you recognize bad habits that strip your ability to pay off debts and contribute to savings can you cut them out of your life.
Where do the envelopes come in? With the envelope method!
The envelope method is an old-fashion way of limiting your spending that makes use of actual envelopes. You label them as categories of spending, using as many envelopes as you need to cover every cent spent in a typical week. Common categories are rent, insurance, and cash loan payments, though it can include groceries, entertainment, and gas money too.
Each week, you take out the amount you need from your bank and distribute it between your envelopes. These labelled envelopes act as depositories for the cash you intend to spend on each category. Once you spend all the money in each envelope you can’t take out any more until the week refreshes.
The trick is to scale back on invariable costs.
Fixed expenses are hard to change. Just think of your rent. Unless you’re willing to move to a less expensive town or live in a smaller apartment, you won’t be able to convince your landlord to charge you less. Though this may be a viable solution to some, it doesn’t work for everyone because moving is very expensive. Expect to pay the same in rent for the foreseeable future.
Invariable expenses, on the other hand, are like their name suggest: changeable. You can control the amount you spend on groceries by searching out coupons and deals at your supermarket. You can reduce your entertainment budget by limiting how often you meet friends at the bar or the theatres. Once you arrive at a restricted limit for these categories, you fill their respective envelopes with that new amount.
Seek help when filling your envelopes.
Finding the right limit for each category can be a challenge if this is your first attempt at the envelope method. If you aren’t sure how to break down your budget into envelopes that have the appropriate amount of money, check in with the folks at MoneyKey. They have a resource center that includes a comprehensive budget guide that goes over the envelope method. It includes tips for creating goal-oriented envelopes to keep your savings on track.
Since they help customers find responsible solutions to cash flow problems with MoneyKey online loans, they understand the constraints people who rely on these loans have to deal with. They’ve tailored their advice so that it’s practical even when using these products or when you’re living pay check to pay check. People who may not have a lot of money to spare can still take advantage of this method with their help.
At the end of the day, take it slow.
We’re used to receiving immediate responses to texts and emails, so few of us have the attention spans or patience to stick with long and involved processes like the envelope method. It will take time to sort out your envelopes and even more to get used to their hard limits. But when it comes to important things like your finances, it pays to take it slow.
A budget isn’t just something that other people use. It’s one of the most powerful financial tools for anyone who earns a living, has goals, wants to save, or likes shopping. If that describes you, it’s time to track your spending and think about the future. Your finances only stand to benefit once you do!
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