If you are struggling to spend less than you earn as well as save money and achieve your financial goals, I want to give you an old-fashioned method that really works.
First, record all of your income and all of your expenses on a single sheet of paper. You can download free budget forms at Crown’s website. Now, divide your expenses into two categories: Fixed and Variable. The Fixed expenses are those things you pay the same amount, month after month, like a mortgage, rent, insurance and loan repayments. The remaining expenses are Variable, meaning they can go up or down in any given month. These are usually things like eating out, entertainment, groceries, clothes, travel, haircuts and spontaneous things like buying a lottery ticket, which I hope none of you do, by the way.
Now, for all these Variable categories, make an actual envelope for each one and carry cash for these expenditures. Let’s say you have $400 in your grocery envelope for the month. That means you can spend $100/week if you go 4 times a month. When the cash is gone, don’t spend any more in that category. You can’t create an overdraft or break your credit card balance by using cash. If you don’t have enough cash to get through the month, then you have to make a plan to reduce your Fixed Expenses.
I know one family that has used the method for over 50 years, and they love it. It reduces stress and will help save money. Try it this month!
