There are a huge number of different approaches to budgeting and overall money management out there, with some of these focusing on creating a big projected spending chart based on extrapolations of your current income and goals, and with others mostly relying on analysing your existing spending habits in order to see when you might be able to make some savings today.
In recent times, however, the “envelope budgeting system” – which involves allocating money to different spending categories like “groceries,” “fun money,” and so on – is becoming more and more popular, particularly when paired with a “zero-based budgeting” approach, which involves working only with the money you have, and allocating every penny to a particular category.
The highly popular leading budgeting app “You Need a Budget” is based on these principles, for example.
Here are just a few ways in which an envelope budgeting system can improve your life.
By bringing your budgeting focus more towards what you can do in the immediate moment
Budgeting should help you to feel more empowered, and should make it easier for you to focus on what’s actually happening in the here and now, as opposed to what you would like to be happening – or what you think will be happening at some other point in time.
The envelope budgeting system – particularly when paired with zero-based principles – brings your budgeting focus much more towards what you can do in the immediate moment, with the money that’s already in your account.
How should that money be spent? Do you need to move money from one category to another?
With this approach, you are much less likely – for example – to find that your entire budget and financial plan is ruined by an unexpected expense in your life, or the loss of a job.
By helping you to consistently save up money for other investments and projects
Many people out there with a burgeoning interest in finance want to explore different investment opportunities and financially-based projects of assorted types, but in order to do so, it’s obviously necessary to accumulate some savings first.
With an envelope budgeting system, it becomes much more manageable to consistently save up money for other investments and projects, such as True ECN broker services, by virtue of the fact that you can consistently put aside a small amount of money as and when the opportunity arises.
By making you more mindful about what you are doing with your money in general
Envelope budgeting systems naturally make you more directly aware of where you are actually putting your money, and how you are spending it in general.
Have you, for example, noticed that you are putting too much into one category – or are overspending and exceeding the target you have set for that category?
Thinking about where you want to assign each penny of your money can provide a lot of helpful insights, and can put you in a mindset that facilitates better financial awareness.
In many cases, simply having a better awareness of what’s happened to your money, and where it’s being spent, can make a major difference when it comes to how you are automatically behaving with regards to finances.