For years since I discovered the importance of budgeting, I have always been a believer of the cash envelop system of budgeting. It was the only budget that worked for me and is still is.
Lately though, I decided to make cash envelope budgeting simpler. While I still use envelope system (though in my case, I am using a a paper clip and not an envelope), I eliminated some of the categories. For example, before, I used to have around Seventeen (17) categories for my envelope system and now I reduced it to only four (4), which are rent, utilities (water & electricity), Pet expenses and others.
The reason why I decided to trim it down drastically is because I wanted a simpler type of budget which saves time and complexities. Also, it helped me not to spend money. Let me explain why.
Before my 17 categories are composed of the following:
- Rent
- Food and drinks- this refers to eating out budget
- Car maintenance- everything car-related including car wash and repair (car is paid off)
- Gifts- to friends, family, etc.
- Non-food essentials- clothing, shoes, etc.
- Pet expenses- for my 2 dogs
- entertainment- this includes hobbies like painting, photography and outdoor activities
- Groceries- no explanation needed
- Health and beauty- vitamins, supplements and beauty products
- Rent
- Utilities
- Prepaid phone
- Charity
- Household/Home- refers to things I buy for home (e.g. furniture, appliances, etc)
- Office expenses- as someone who is in a supervisory level, there are things that I have to shell out personal money
- subscription- refers to internet, postpaid phone, Netflix, Spotify, Youtube and Skillshare
- General Expenses/ misc- any expense that does not belong to the above categories.
Looking at it, it takes a lot of work and time to do this budget. Plus, it makes me spend more. By putting an X amount of money in each categories, I feel like I am obligated to spend on each of them every month. For example, if I have an X amount money left in my food, groceries or miscellaneous categories, I feel like I can splurge and buy stuff which is not only non-essential but also add clutter to my life. It makes me feel like I am entitled to spend money on something since I have a budget for it. Likewise, if I need to spend more on groceries category but I no longer have a budget for it, I felt trapped and it adds to frustration which should not be the case in the first place.
Now that I only have 4 categories- expenses other than rent, utilities and pet-related are all lumped on the “others” categories. Ofcourse, the others category has fixed expenses such as my subscription fees but other than those, I don’t have a fixed amount to spend on. This means I can spend more on groceries if I need to.
What is your budget system? Comment below.
This actually helped me not to spend money on something only because I have a budget for it. It made my conviction in refusing to spend money better. Now with this budget, I only spend when the need arises which makes me save money more.