If you ever seen "budget" or "budgeting" on the internet you've seen budget envelope that Dave Ramsey and others advocated for. I've changed that concept after I received my stimulus check from the government. I didn't believe the government would send out checks to people until they actually did, so when the money came, I was not in need. Many people put that money into the stock market, others paid bills, many spent for no reason, and I decided to get ahead of my bills. The easiest way to end living direct deposit-to-direct deposit / paycheck-to-paycheck is to know EXACTLY where your coins is going.
So instead of allocating funds for each and expense and their individual envelopes, I place all my monthly expenses in one envelope and at the beginning of the month I deposit that cash into my account and pay all my bills. How? As mentioned before, I put my stimulus check in the envelope, and when I got paid I placed the rest of the funds I needed for that month's expenses.
The best part of the whole experiment, is that is made me look at my spending and eliminated the excuses. If it was more than my miscellaneous spending cash then it deserved a spot in the budget, otherwise I had to decrease the money spent. I imagine someone reading this and thinking about their expenses, believing that that number is too high and not even trying. If the number is too high, which it probably will, many aren't making enough to cover their bills. You're not the only person in the city living paycheck-to-paycheck. So if you can fund all the expenses on your envelope, you continue to put money in until you can. Then during that month, make sure you fund your envelope before you touch your check.
What Are My Expenses?
Easy way to find out. Write ALL the expenses on the envelope, I write them down in payment due date order. Expenses is everything I spent money on, including my: saving, investing, debt payments. If I spent money on it, it is an expense.
How Much Do I Need to Save?
Also, easy way to find out. Once you write down all the expenses, you can will know exactly how much you need. The experts say 10-15% of your salary, but in reality, the main thing is to START saving and it will grow from there. I set amount targets for myself.
How Can I Include Unexpected Expenses?
Again, once you write down all the expenses, you can will know exactly how much you need. To help prepare for unexpected expenses, I added savings to my expenses. So in my expense envelope I include my saving goal and I also round up and pay extra on my debts. Honestly, we can plan for an expensive purchase or repair by putting away funds for a rainy day. Start saving up for 3-6 months of expenses for a beginner goal.
How Will I Stay on Track?
Having everything written and right there in front of you helps keep me accountable to myself. The process comes with trial and error, but having everything written down does help give you a starting point and then can adjust from there.
How Do I Motivate Myself?
Each person must answer that for him/ herself. I like to make goals to adjust spending and find accomplishing that the motivation I need. Sometimes, games or activities can help can the motivation, drive, and interest. I have also created scratcher to make saving fun. The best motivation, imagine not having to worry about your bills.