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WATERVILLE — The envelope system has worked for many, what do you have to lose besides some debt and a bit of stress?
The “envelope” system for budgeting has been around for decades; however, because some people may be unfamiliar with it, here is a recap on how it works.
When you receive your paycheck each week, divide it into individual envelopes labeled for various monthly bills and discretionary spending. Remember that every payday throughout the month will be done exactly like that.
Each time you pay a bill or spend discretionary money, it is taken from the coordinating envelope. For example, if you have an envelope labeled “GROCERIES,” and you have allocated $150 per week for food, you would take $150 out of the envelope and take that with you to the local grocery store. This will keep you from overspending as your order total must be $150 or less to align with the money you have with you.
This is a great way to keep your itemized expenses on track and stick to your budget.
One of the complaints people have with the original system is that they don’t like having all their cash on hand and running the risk that they will misplace an envelope, thus losing their cash. If that concerns you, you need not to worry as the “envelope” system can be accomplished digitally, too.
At New Dimensions Federal Credit Union, members can budget through free online banking. Instead of paper envelopes, you could open club savings accounts for each category you need to budget for. These separate accounts would be labeled with a specific category, such as mortgage/rent, property taxes, oil/gas, power, water, sewer, insurance, groceries, car loan, entertainment and so on.
You can open as many accounts as you need. Each week, you would simply transfer your weekly budgeted amount to the appropriate club account.
When you go to pay the bill, simply transfer the money back to your checking account via online banking and pay the bill. This is a great concept for bills you may pay quarterly, semi-annually or annually, too. It will get you in the habit of saving weekly for all your bills and help you to plan for upcoming expenses, too.
If you would like assistance creating an effective household budget, contact New Dimensions Federal Credit Union at 207-872-2771 or visit www.newdimensionsfcu.com.
