How To Control Spending In Ghana With Cash Envelope System
Budgeting is a financial statement that’s outlined to control spending over a specific period of time to meet planned financial goals. This post focuses to educate you on how to use the cash envelope system of Budgeting to control, track and limit over spending. This method seeks to give more rooms for savings and gives your financial status a good score.
Cash envelope system is a type of Budgeting in which money is allocated into envelopes of different printed or written budget categories according to spending budget. Here, expenses are broken down into categories and a set amount of money expected to be spent for the week or month is placed into it. This method is very well known to be the simplest and easiest ways of controlling and tracking expenditure.
Why The Cash Envelope System Is Essential
The cash envelope system is very essential in the sense that it’s very simple and easy to use, that’s it actually simplifies budgeting by breaking down expenditure into categories to avoid overspending. It also helps you to spend less because you can track your expenses. Cash envelope system makes you more disciplined in managing and controlling your personal finance. It can be very great method and can control over spending. Once you discipline yourself, you stop spending when your envelopes are empty. This forces you to stick to your budget allotted.
How The Cash Envelope system Works In Ghana
The central idea behind cash envelope system is to track your spending according to your budget, avoid overspending and help you to manage your personal finance for a good financial status. If you are that kind of person who spends blindly without a tracker, this post is meant for you.
The first step to begin a cash envelope system is to put your expenses into categories, let’s say rent, recreation, food, shelter, groceries, internet fee etc. Write them in order of priority. You may budget for weekly or monthly depending on your income flow. Always make your budget and expenses before you withdraw money to avoid over withdrawal. Let’s say your monthly budget sums up to $300, make sure you withdraw exactly that amount.
After categorizing your expenses, set budget for each of the various categories according to your monthly or weekly expenses. Setup the amount of money needed to spend for the week or month and then budget the categories. Let’s say food covers $50, rent covers $ 100 and it goes in that order with the most prioritized categories first. Know the amount of money you should budget for each category bearing in mind of savings and insurance. Write categories on envelopes or better if you use cash envelope wallets.
The next step is to put budgeted money allocated for each category into the envelopes. You can choose to use the old method of envelopes with each category written on each envelope or perhaps, get keeper cash envelope system wallet from Amazon or solight all-in one cash envelope wallet. There are many cash envelope wallets and purses on the market where you can get one for your cash envelope system budgeting. I recommend that you use the cash envelopes wallet because it’s easy to carry along and very modernised.
The next step is to be very honest and realistic to your cash envelopes by going according to your budget. Do not spend overboard by withdrawing extra money from your account. You should spend according to your budget on each category.
Keynotes To Follow With Regards To Cash Envelope System
✔ Stick to your budget, do not spend overboard.
✔ Always make your budget and categories before you withdraw money to avoid over withdrawal.
✔ Do not withdraw extra money when an envelope’s cash is finished, rather revise those categories of envelopes that finishes before time to address that.
✔ Track the record of your expenditure.
✔ Put back change into a particular envelope when there’s change after spending.
✔ When the money in an envelope is finished, you are done in spending on that category.
✔ Don’t spend from a different category of envelope to another.
Cashless Envelope Tracker
The cashless envelope tracker is another modernised version of cash envelope system of tracking and controlling expenses. It’s no different from Cash Envelope system but this one seeks to allow you to spend without physically handling the money or carrying money with you to avoid overspending. This tracking system is meant for credit cards and debit card payment or only for online payments. Instead of carrying envelopes or cash envelope wallets with you, rather you carry printed or written trackers that will guide your spending.
With the cashless envelope tracker, make your budget, categorize your expenses and allocate amount for each category. Prepare your tracker by writing or printing categories of expenditure on a small tracker(paper). That’s what you’ll be carrying along with you and that will serve as expenditure tracker. You pay for your bills, food, entertainment and all expenses according to your tracker with debit card or online without having to touch the money. Once you reach the spending limit of an expenditure category, you can’t spend money on that category anymore. This can be done by keeping your balance updated.
In conclusion, cash envelope system aims to control spending by putting money in envelopes according to your budget category. It’s not meant to make life difficult to live or miserable but to help you spend according to your budget and restrict you from overspending. You can always revise your budget and categories before beginning new month so as to address those categories that finishes before time. This is not to withdraw all your earnings but you withdraw funds according to your budget. Cashless envelope tracker on the other hand aims to control spending by not giving you physical access to your funds. Most people tend to spend more when they have money in their wallets, so by paying for your expenditure online seems to curb extravagance by avoiding physical and direct contact with your money.