The ABCs of Saving Money will appear occasionally throughout 2010.
Envelopes
The Envelope System is one of those things that is often (always?) mentioned when you first start talking about trying to save money. I’m not a big fan of it, but others swear it works. By budgeting each paycheck, and separating the different categories of the budget into cold, hard cash that you then tuck into the appropriate envelope, proponents of cash swear that the system helps them live on a budget.
There are lots of ways to adapt the envelope system to meet your needs. Some people use cash for everything except for the big bills, like rent or mortgages, for which paying cash would be too much of a hassle. Others use envelopes for a limited range of budget categories- choosing only to pay for their groceries, for example, in cash. My mother puts every $5 bill she comes across in envelopes that she uses to save for different goals- a new computer, paying the cleaning lacy and so on.
I don’t like using cash because I find that I spend much more when I have cash in my wallet then if I limited myself to paying just by direct debit card.
The Elephant in the Room
The elephant in the room is that thing that no one wants to talk about…debt, or credit cards, or how much you earn or you paid for something. Money is a touchy subject, one that few people feel comfortable talking about openly- unless it’s to brag. Remember however, that appearances aren’t always what they seem. People may be bragging about their latest vacation or about the great deal they just scored but without talking about what’s underneath: a less than stellar retirement fund, or credit card debt. I read a great quote the other day, that went something like this:
Beware of trying to keep up with the Joneses- they just might be trying to keep up with you.
Easy money
If it comes too easily, if it seems to good to be true- then it probably is. I think that the only way ‘easy money’ really is easy money, is when it comes from doing something you love. Otherwise, those get rich quick schemes, the instant internet fortune that comes with blogging- well, it’s probably not going to happen!
Eating in or out (or In ‘n Out)
I’m a big fan of eating out. I like trying new food, I enjoy the experience of eating at a nice restaurant or the burger joint down the street and I’m also lazy. Cooking every night can be a lot of work! But there are ways to make eating out more frugal: eating out for lunch, instead of dinner, going out by yourself (I sometimes squelch the eating out craving by having a lunch out with colleagues), making sure that you use coupons if possible, only ordering the main dish (if you’re ordering Chinese, for example, then make the rice at home) and so on.
What’s the E in the ABCs of Saving Money for you?
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{ 4 comments }
I love the envelopes, especially for grocery shopping and gas. I find that I do spend less when I am spending cash. There have been times when I have zoned out at the pump and pumped a full tank on a debit card, but if I would have had a twenty, I would have been more alert.
Certainly we spend our grocery money more carefully, knowing that there is just so much in the envelope. We have tracked down the best store that we can find that has great prices and we stick with that.
It’s all a training period. People like me, who have gotten themselves heavily in debt, who are smart, but medicate themselves with stuff need to learn a new way and the envelopes help teach that.
But they are worthless without a written budget for every single month.
Regarding “E”, the Elephant in the Room…I wholeheartedly agree and yet also chuckle when thinking how much our culture affects this. I lived in southern China for a while and learned that it was common to ask how much something cost or how much a person made. The goal was then to one-up your neighbor by saying how much less you paid for the same item, or how much more you make at a similar occupation. Sometimes I wish it was more acceptable here to compare how much I saved rather than feel the pressure to pretend I spent more.
An education IRA – my friends have been talking about setting them up for "future" children. Since summer time seems to be all about wedding in my age group, making sure you have a heads start on college savings for what children may come seems like a good idea.
Enough: Most times we already have enough.
Be it food in our house, or going into our bellies
enough clothes in the closet
enough ‘stuff’ to decorate an entire third world country