PERSONAL GROWTH:  PAYING BILLS & REACHING FINANCIAL GOALS

Software programs replaced the Envelope Method when computers became household staples. These programs are user-friendly and can be a terrific way to track spending.  However, “Cash Stuffing” is making a comeback as an easy, successful budgeting method.

Cash Stuffing’s success comes from its simplicity, satisfaction of the hands-on feeling, and visual reinforcement. You feel the money and see the envelopes get fatter as you stuff them. You see money set aside for your bills and feel the security.  Think of Scrooge McDuck in his vault, gleefully running his hands through his mountain of gold coins.

Cash Stuffing is especially useful for folks of modest means, to cut down on spending, decrease debt, and save for a particular goal.  Start from where you are and go forward. Now, cash your paycheck and break out the envelopes!

Let’s begin Cash Stuffing!

Start where you can, then work up to at least 20% of your income into a Savings Envelope each pay cycle. Label the other envelopes with categories according to your circumstances, based on necessary spending: rent/mortgage, groceries, utilities (heating fuel, electricity, water/sewer, and phone), health care (physical & mental, dental and prescriptions), transportation (car payment, maintenance, repairs, fuel, inspection, and registration), insurance (home, vehicle, and health) and taxes. Add envelopes for other priority categories such as school loan payments, credit card payments, and other accumulated debt.

Then, keep a reasonable amount in a “Day-to-Day Purchases” Envelope and pay attention to how fast those add up. Once that money is gone, stop! No more buying things! Do not reach for a debit or credit card. Those are too easy to use without tracking the spending, which can lead to fees, charges, increased debt, and suck up your savings. Do not “steal” cash from other envelopes. A benefit of Cash Stuffing is seeing the empty “Daily Purchase” envelope and knowing you must stop spending.

Finally, review everything above and determine if you must cut down on expenses to fill the Savings Envelope, especially for emergencies. Extras are nice once you can afford them, but until then savings are more important than dining out, cranking up the heat an extra degree, leaving lights on, and a fancy phone. Once you have decent savings, you can make an envelope for other goals like a vacation, or a new car.

Remember the most important rule of budgeting is less money out than in. Follow this rule, stuff your envelopes and you will see where your money goes, figure out if you need to cut back on expenses, see debts decrease, see savings grow, and be rewarded by reaching your goals.