In a time where many people find themselves living beyond their means, it has become crucial to create a spending plan. This plan will help you see where your money is going and to make adjustments where needed. The old envelope budgeting system still works and can help you save money.

What is envelope budgeting?

According to Mary J Fourie, a lifestyle financial planner and coach, envelope budgeting is a concept whereby you divide up your total cash for your desired period into envelopes for different things.

She says it is called envelope budgeting because before the digital age, one would physically put cash into an envelope to be spent on a particular item.

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How does it help you?

Fourie says the system forces you to keep track of how much money is left in each envelope relevant to that expense category.

“If I am at the shops today and it is the second week of the month and I have R750 left of my R1000 food budget, then I know that I’ve spent 25% and have 75% left to last me three weeks,” she explains.

“If I spend more than 25% or R250 this week, then I will have less to spend next week and the week thereafter,” she adds.

Is envelope budgeting still relevant in this digital age?

“In our modern day one could still use traditional envelopes and cash, however there is a risk that comes with having cash on you or at home,” she says.

Fourie says with technology taking over, envelope budgeting can also happen in the digital space.

“Now we have apps that can help us to allocate our spending into different “virtual envelopes”. You can then track how much you spend through entering the amounts of what you spend and where,” she says.

According to Fourie the apps automatically calculate how much you have spent in total, and how much you still have left to spend for that period.

Fourie says that even though the system helps you to stick to the plan, it requires time and discipline.

“You will need to make the time to record your spending in the app and get into the habit of planning every month how you want to allocate your money,” she says.

Here are some of the best apps to help you manage your money better:

  • Stash
  • Capitec Bank App
  • 22 Seven

This article has been prepared for information purposes only and it does not constitute legal, financial, or medical advice.The publication, journalist, and companies or individuals providing commentary cannot be held liable in any way.Readers are advised to seek legal, financial, or medical advice where appropriate.