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Budgeting

14 Reasons Why You Might be Broke

Posted on January 12, 2022

Have you ever looked at your financial happens to consider why you might be broke? Check out these 14 reasons you might be broke to get you started managing your personal finances now.

One of the reasons many of us are broke and don’t realise it, is because we’re all doing the same thing. We see friends, family and colleagues and those around us buying new cars, taking on large mortgages, buying the latest gadgets and accessories. When everyone else is doing it, it can be hard to admit the truth, that maybe you are broke?

Being broke will have a different definition for each person.

To me, being broke is not having enough money to pay for things in cash.

It’s the person with no Emergency Fund to cover unexpected emergencies like a car breakdown. It’s the person who spends every dollar they earn and saves none. It’s the person who has debt they can’t repay, or that they can only afford the minimum repayments. Or the person who is behind on their bills.

Maybe you’ve convinced yourself that you aren’t broke – that’s as long as your car doesn’t break down. Or you don’t lose your job. Or have to fork out for an unexpected insurance excess.

Maybe it’s easier to believe you aren’t broke whilst the times are good, but with one unplanned financial emergency you might be faced with some harsh truths about your finances.

The important thing to remember is not to give up hope! Being broke doesn’t have to be permanent. Although your “brokeness” won’t disappear overnight, every little effort you make is a step in the right direction.

These 14 reasons why you might be broke below might help give you a new perspective on your finances and help you take the necessary steps you need to take to leave your broke days behind you.

**This post contains affiliate links. If you make a purchase of a product from the links in this post I will receive a small commission, at no cost to you. This allows me to keep my blog advertisement free and support the running costs of my blog. I only recommend products I believe will add value to others and that I love myself.**

14 Reasons Why You Might Be Broke

You’re saddled with debt

You might be broke if you are snowed under by a large amount of debt. Are you the not-so-proud owner of a car loan, student debt & credit card with a balance? The repayments on those debts can quickly eat away a large chunk of your paycheck each pay period. Once you add a few subscriptions, dining out a few times, increasing grocery, utility & petrol bills and other expenses like child care you might find yourself struggling to keep your head above water.

It might be possible to afford the minimum repayments and use that as your justification to keep up current spending habits, but that doesn’t mean you won’t get to a point where it is going to be harder and harder to keep your head above water, financially speaking.

When you take into account interest rates increase, high cost of living, and stagnant wages if you haven’t curbed your excess spending and reliance on credit, that so-called manageable minimum repayment won’t stay manageable for long.

2. You have one or more car loans

When you see friends and family posting about their new wheels, it can be very tempting to get a new car and car loan to go with it. USA Today reports that Americans purchasing new cars in 2018 agreed to pay an average of $551 per month for 69 months according to car-buying advice site Edmunds. That is a lot of money going out the door not even taking into account food, utilities and housing costs!

Financial Expert Dave Ramsey’s ‘the car rule’ advises you should not invest more than half your household income into things with motors, that go down in value. If you are earning $60k and you have a vehicle that is worth $35k with a similar car repayment, it might be one of the reasons you might be broke and time to consider selling that car. If you are living above your means when it comes to your car, it might be time to consider selling your vehicle for a more affordable one. You can always buy that car of your dreams later on when you have the cash!

3. You still have cable

With subscription services like Netflix available and a vast array of digital channels coming onto the market, there is no need to keep paying expensive monthly cable bills. Swapping out the $50 a month Foxtel subscription for a $9.99 Netflix one will save you $480 annually or close to $5,000 over ten years! If you are paying for the top of the line Cable at $100 a month, double that figure! See what I mean? That’s some serious *cha-ching*!

Not to mention you will avoid wasting valuable time and attention listening to those never-ending ads that you don’t get with services like Netflix! (And here’s hoping it stays that way!)

So if you are still paying lots for your cable, why not cancel it and see if you even miss it? You can always get it back if you really feel it adds value to your life.

4. You try and keep up with the Jones’

If you constantly give in to pressure to buy the things that everyone else around you have, you are going to potentially end up living above your means.

Are you working in a high-paying field with other high earners and trying to keep up with the pressure to buy and drive only the best? And get every beauty treatment under the sun to “look as good” as everyone else?

Stop and think for a second before you rush out to buy the next ít’ thing. Consider:

Do you earn similar money to them? Are you trying to live the Kardashian lifestyle on an office assistants wage and making unreasonable expectations of your income?
Do you already have enough of what you are buying or something equivalent? Maybe you already have a sufficient makeup collection or wardrobe and you might need to shop more intentionally?
Is it possible, those around you are buying all their new awesome stuff with credit cards and are struggling to keep up with repayments?

Trying to keep up with the Jones’s is a race to the bottom and one of the reasons you might be broke. Consider spending your time and attention on people who make you feel good about yourself and accept you for who you are rather than making you feel inadequate based on what you can or can’t afford.

5. You don’t pay yourself first

You look forward to payday every week or month only to realise days later that you’ve spent all your money and have to scrounge what coins you can find in the bottom of your handbag or what notes you can locate your pants in the laundry hamper. If you don’t have a plan in place for your money from the moment it goes into your account, it is going to get frittered away before you even realise it’s all gone.

With one simple strategy, you can make living paycheck to paycheck a thing of the past.

By creating a Zero-based budget you can give your dollars a job before they are spent and make sure your spending is prioritised to not just your needs and wants, but your financial goals.

Setting up an automatic savings transfer to transfer your goal savings amount to a separate savings account each payday ensures you have funded your financial goals before the money is spent. Soon enough I promise, you won’t even miss it and will revel in watching it grow month to month!

6. Shopping is your hobby

One of the reasons you might be broke is if you use shopping as a hobby. If you shop when you are bored, sad, happy, for entertainment, or to be social, you might be heading for a life saddled with debt. Particularly if your shopping trips are happening more frequently. If you would describe shopping as your main hobby, it might be time for you to branch out and get some new ones.

One way to retrain your consumerist habits is to declutter your home so you know what you do and don’t have and create a Capsule Wardrobe of clothing you love to remove the temptation to be on the lookout for more clothes.

7. You don’t invest time to learn about finances

One of the reasons you might be broke is because you’ve never taken the time to learn about finances.

A common habit with millionaires is they read 1-2 books every month! And if you’re broke, reading the occasional finance book is a great place to start. Even just reading one is going to jump-start your financial knowledge. With apps like Audible you can easily listen to one on your morning commute to work.

You can read more about my favourite financial books here.

You might also consider investing in a financial coach to help your gain clarity around your finances and help you work towards your financial goals.

8. You don’t have a budget

One of the reasons you might be broke is if you don’t have a budget. This means that you can’t tell your money where to go and you’re probably going to spend more than you planned to, each pay. When you tell every dollar where to go, you can take back control of your money and make sure more of your hard-earned money is going where you want it to, whether that be to your retirement account, savings, investments, or even just spending your money more intentionally.

9. Your housing is unaffordable

Most financial experts suggest that you should keep your housing costs to 30-35% of your combined after-tax household income. If you are paying 30% or more of your after-tax household income to your rent or mortgage, it might be one of the reasons you are broke. It’s a term most refer to as ‘house poor’.

If you are living in a 4 bedroom home with rooms that are sitting unused most days of the week, and finding it hard to pay your mortgage or rent, it might be time to consider downsizing.

Even a $100 a week reduction in rent can add $5,000 to your annual savings total or could be used to help pay down your debts quicker. You may even need the extra space, but it might be time to consider temporarily downsizing for a year or so until you can get ahead financially.

If your home is pushing more than 30-35% of your after-tax household income, it might be time to at least consider your options when it comes to reducing your housing costs.

Selling a house comes with other costs such as stamp duty, so this might be more expensive and not so helpful. If that is the case, you could consider other options to save on housing costs such as renting out part of your home such as your garage or shed for storage, or your driveway, or even a spare room.

Check out these 13 benefits of a smaller home to help you understand how downsizing might not be such a bad thing.

10. You only pay the minimum repayment on your debts

If you are only paying the minimum repayments on your debts, it’s going to be hard to ever get on top of your debt. If you are roped into a 7-year car loan as well as credit cards that could take 10 years to pay off, that’s a lot of dollars that are not going to your financial future.

It can be easy to live in debt denial when you can meet the minimum repayments, but all it takes is a job loss, a medical emergency, or a car breakdown and it can throw a huge spanner into your finances and make it difficult to meet your repayments, even just the minimums.

Don’t live your life on the financial edge and try and convince yourself you are not broke. Break the debt cycle!

11. You surround yourself with other spenders

Do you spend the majority of time with people who encourage you to spend? Is there a friend that constantly wants you to go for expensive beauty days or to high-end restaurants? Or one that drags you shopping and then insists that you have to buy something because you can’t possibly leave empty-handed? Or maybe you just enjoy watching haul videos on YT?

Surrounding ourselves with people with different (or lacking) financial goals can impede the ability of your savings and keep you broke. It’s never fun being the one to say no to nights out, or a trip with friends, but it is a must if you are want to say goodbye to #thatbrokelife.

Be honest with your friends and let them know that you are trying to improve your finances and pay off debt and that you would love to come out and see them, but suggest some more frugal ideas that won’t hurt your budget. You might even find that some of them are happy to help you participate in more budget-friendly catch-ups and you might even inspire them to have a look into their finances.

12. You don’t have Financial Goals

If you are just coasting through life without giving any thought to your financial goals you might be broke. No one saves money, invests in their retirement funds, or pays off their debt by accident. These things all take thought, intention and action.

Start setting yourself some financial goals and take control of your finances and say no to being broke!

Some of your financial goals might be:

To review your retirement account performance
to create a budget
to sell your stuff to help you save up an Emergency Fund
to pay off your debt faster
pay off your mortgage or save up a house deposit
save for a holiday to be paid in cash
save up for your next semester of college

It doesn’t matter how big or small your financial goals, the key is deciding on them, writing them down, and making plans to achieve them within your chosen time frame.

13. You don’t have an Emergency Fund

If you don’t have a rainy day fund, you are opening yourself to unnecessary stress and financial hardship.

When you are going through a stressful event such as a car accident, injury, or another emergency, you don’t want to have that added stress of worrying about how you are going to pay for things. Emergencies are going to happen. Instead of just hoping for the best, take action and plan ahead. Put away an Emergency Fund of 3-6 months of expenses to give you peace of mind.

I guarantee you, at some point, it might not be next month or even this year, but you will feel a lot better knowing that you have that extra cash there ready to go to cover any unexpected emergencies.

14. You don’t earn enough

Sometimes you have to face the elephant in the room, that you don’t earn enough money to cover your lifestyle. But don’t feel defeated, it doesn’t have to stay that way. Here you have two options. You can earn more income or cut your expenditure.

Consider the following options if you are struggling to make ends meet:

Decrease expenses so the pressure to earn more is reduced I.e. sell the second car if you can do without it, cook more at home, cut the cable, tell your kids they can only choose one after school activity this year – you get the idea.
Pick up a Side Hustle, here is a list of 40 Side Hustles to get you started in addition to your current job
Ask for a raise. If you have been going above and beyond at work and your pay review period is coming up it might be a good time to try and request a raise.
Get a better paying job – if you are not earning much in your current job, it might be time to broaden your pay horizons and get a better paying job.
Do overtime at your current job – if possible, ask your current employer for overtime or extra hours so you can boost your income.

Minimise With Me Financial Coaching

If you want learn how to spend with intention and take the stress and anxiety out of your money, book in for a free Q&A call to see how financial coaching can help you gain clarity around your finances! You can learn more about Minimise With Me Financial Coaching here.

What does a debt-free future look like for you? Let me know in the comments how your future would change if you could pay off your debt?

[Photo by Michael Longmire @ Unsplash.com]

Budgeting

11 Everyday Tips to Help You Save Money

Posted on December 23, 2021

Sometimes finding more ways to save money can seem too hard, especially with the rising cost of living, it seems like everything is going up!

You research tips and think to yourself how is saving $12 a month on bank fees or a few dollars on a coffee really going to have any impact on my savings? How will that help me get on top of my debt or save for a holiday?

It may all seems like too much effort with limited results, but it is important to stay focused on the bigger picture.

Savings can be found anywhere you spend your money.

In order to find savings, you need to look at where you currently spend your money and get creative about ways to reduce that expenditure.

It could be as simple as a phone call to ask for a better deal, or taking ten minutes to research something a little bit more before hitting the buy button.

Becoming complacent about spending can end up costing you more than you may realise. And with most expenses being something you fork out for each year, saving more money sooner than later really pays off!

Here are 11 Everyday Tips to Help You Save Money. Each one alone may only give you a small increase in your savings, but together they can make a big difference over the space of a year, and the less money that comes out of your pocket day to day – the better for your savings goals!

11 Everyday Tips to Help You Save Money

1. Review insurance annually

Shop around for all insurance bills annually. Insurance can increase significantly year to year and most companies will take advantage of loyal customers who don’t put the time in to compare what they are being charged.

Most insurance companies offer quick online quotes and allow you to adjust the market value and excess coverage in order to get a true comparison and potentially save on your premium. Within minutes you can have a few price comparisons for the insurance you are renewing and be well on your way to saving money. I’ve often saved hundreds of dollars each year reviewing my insurance before renewing it.

Do your best to review these insurance prices every year to save:

Car insurance
Greenslip (medical vehicle insurance)
Home and Contents Insurance
Health Insurance
Death and Permanent Disability Insurance
Income Protection Insurance
Mobile Insurance

Another option, once you have some online quotes for reference is to call your insurance provider to ask if they can make you a better deal on your insurance premium.

Whilst you are there, consider if you even need the insurance you are paying.

Insurance is highly recommended when it comes to things that can ‘change your life’ such as home insurance or health insurance. If you own a car that is only worth $1,000, you might save some money on insurance premiums by buying Third Party Fire and Theft insurance cover, rather than comprehensive insurance (so you are covered if you hit someone or something, but you aren’t paying to cover your car if it gets totaled).

If you are paying for insurance premiums like mobile insurance or extended warranties, you might be able to just cancel those as they aren’t going to “change your life” if they break. You are probably better off just setting some money in a savings account in the event that you need to replace those items.

2. Only shop when you have something specific in mind

Avoid going to the shops unless you specifically need something, particularly if the only reason you are shopping is that you are bored.

Make an ongoing list in your phone or planner of what you need as you think of it (I use Trello + it’s free! *Not sponsored just something I love) and take your list with you on your next trip to the shops.

Sticking to a list will allow you to limit your shopping to specific stores and aisles, helping you avoid the temptations of items not on your list. Not only will this help you save money but also save time, allowing you to use your time more wisely such as on a side hustle to help you pay off debt.

3. Shop around for mobile phone plans regularly

Phone bills can add a significant cost to your annual budget. To save money shop around for phone plans, particularly if you are on a no-lock-in contract arrangement and have the flexibility to move around.

Phone companies are always updating offers to attract new customers and if you haven’t researched in the past twelve months what offers are available to you, you may be losing out on some amazing savings.

By changing my phone provider, I was able to take up a phone plan for new customers that was half the price I was paying to my current provider for the same inclusions. This added up to a saving of $210 in the first year. It may not sound like a lot but that saving alone covers my gym membership for the next four months and that is definitely money better spent on my health.

4. Limit dining out

Limit eating out where possible. With food delivery options at our disposal, it can be very tempting to just order food out more often than we should when it comes to our budget.

If you do want to go out, buy the meal you most prefer to eat out whether that is breakfast, lunch, dinner, or dessert. For me personally, I can easily make toast or pancakes at home so I would rather use my dining out budget to pay for dinner which is something much more time-consuming for me to create. I often opt for take away now, over dining in so I can drink my preferred drinks at home at a fraction of the cost (Coke’s are now $5 AUD at restaurants and I’m not loving it) and save more on dining out.

For dessert, often instead of paying $30 on top of our dinner bill at a restaurant, I’ll opt for ice cream at the movies or occasionally have some store-bought waffles on hand in the pantry which comes out much cheaper and certainly doesn’t seem like a sacrifice to me!

If you have a dinner outing that you don’t want to miss, opt for one of the cheaper menu items so you can socialise whilst avoiding blowing your budget. Alternatively, staying home and making dinner with friends or your partner is always a good compromise.

5. Start with reducing one of your regular expenses

What do you buy regularly? Is it coffee? Chocolate? A soft drink at lunch? Pick one expense you buy regularly and try and reduce your spending on that one item. If you love coffee, buy a good quality coffee to have at home and bring your reusable coffee cup out with you.

Can you bring in a bottle and have water at lunch instead of spending $4 daily on a coke? Or just bring a can from home at a cost of $0.50 saving you $3.50 for each drink.

Could you cut back on buying the pricey vending machine chocolate on your afternoon tea and just bring some from home? Even if you just cut back slightly, or even make small reductions to a regular expense that will give your savings a kick start. Once you have swapped out one, try adding another!

6. Create a wish list with a wait period

Sometimes we don’t even realise we are making impulse purchases and taking a step back, or waiting just 24 hours to think about a purchase can help us be more intentional with what we are buying and bringing into our homes.

Creating a wishlist is a great way to think about future purchases. When you come across something you want to buy, write it on your wishlist (again I use Trello for this!) and try and wait a period of time such as 30 days before buying the items you have listed. This will help you to avoid impulse purchases and make more informed decisions.

A wishlist allows you to truly assess whether this new purchase is a need or want if it will add value to your life and whether you want to part with your hard-earned cash in exchange for it. It also allows you time to consider other products, look into reviews, ask friends for recommendations and do price comparisons to make sure you are getting the best product for your needs at the best price.

Your wait period can start small and you can gradually increase it to what suits you. To begin with, set a goal to walk away from the shop, and say to yourself if I really want this I will come back to buy it before I leave. If you still want the item when you are ready to leave you’ll make the effort. I have saved so much from this method alone as it is a lot of effort to go back to a store.

Making educated purchases can help you avoid suffering any buyer’s remorse, having to go through the hassle of a return, and save you any disappointment in your purchase.

7. Review your utility plans

Have you been paying your utility bills on autopilot without reviewing what plan you are on? A quick call to your service provider or an online search for us Millenials who hate phone calls can save you hundreds in a matter of minutes. By contacting my utility provider I was able to switch to a new plan that offered a 16% discount for on-time or early payment. A quick ten-minute phone call has added up to hundreds of dollars of savings that have helped us to save money and significantly reduced our utility bills.

8. Unsubscribe from store mailing lists

We are constantly exposed to advertising whether it be on the radio, TV, Youtube, or when we are checking our email. I even get a little ad at the bottom of my new TV, these ads are unrelenting!

My inbox is constantly being populated with new sales and offers from stores and became an unnecessary distraction. Unsubscribe to your unwanted shopping email subscriptions as they come into your inbox. When you aren’t being informed on sales 24/7 you will reduce the desire to go shopping and buy unnecessary things as well as the fear of missing out. Instead of having advertisements telling you what you need to buy, you can be more intentional and only add to your wish list the things that you need.

No knowing about a holiday or store sale is so freeing and goes a long way to help you spend your money with intention.

9. Stop paying ATM and monthly bank fees

No one likes paying bank fees, there is no benefit to us for these costs which makes this expense a great place to start saving money. Learn where your bank’s local ATMs are and avoid withdrawing cash from other bank tellers.

Each withdrawal is at $2.50 or more which does add up, particularly if you are only withdrawing small amounts. Think ahead or pay by card where you can. Consider getting a card that gives a 100% ATM fee rebate. More and more banks are offering this now which is great to see!

I recently used my bank card overseas and saved $$$ on international transaction fees as they were reimbursed by my bank (do your research before travelling to see which bank card will be best for you when travelling).

Another expense that adds up is monthly bank fees. If you are being charged a monthly bank fee, contact your bank and ask them to waive fees on any bank account. Generally, they will if you deposit a certain amount or more into the account each month. If you are being charged monthly bank fees on your mortgage consider changing your home loan to a fee-free one (this always grinds my gears, I refuse to pay banks a fee for the privilege of paying them interest) or asking for those fees to be waived. These small banking fees add up month to month, year after year, and are much better in your bank account.

10. Review your super accounts

Do you have one superannuation account for every job you have had to date and have yet to consolidate them? Each superannuation account charges administration and investment fees, and insurance fees which you could be paying for twice, or more across multiple accounts. By having more than one superannuation account you are throwing away a large chunk of your retirement savings.

Consolidating your super is a lot easier than some might think. Most super funds just require you to fill in a Consolidate Your Super form and will contact your other superannuation fund to transfer your balance into your new account on your behalf. You can learn more about this process here. It may seem like your retirement is a lifetime away but every dollar you can save today is going to make your life a lot easier in the future.

11. Sign up to your local library

I recently joined my local library after hearing about the access to borrowing eBooks and audiobooks. I never go to the library, but could not pass up access to free ebooks and audiobooks on my phone. You only have to go to the library once to sign up and after downloading the OverDrive app you can borrow eBooks and audiobooks for free without having to leave your chair.

I’ve listened to and read countless audio and eBooks this way. If you aren’t too set on only reading physical copies this is a great way to read more and save money on buying books. They might not have every book you are after but you can go on a waitlist for your preferred one.

There you have it, 11 Everyday Tips to Help You Save Money. I hope these were helpful for you to save some extra cash this year.

Do You Want to Learn How to Spend Your Money With Intention?

If you want to learn how to spend your money with intention and in line with your values and take the stress and anxiety out of your money, book in for a free Q&A call to see how Minimise With Me financial coaching can help you gain clarity around your finances!

You can learn more about Minimise With Me Financial Coaching services via the link below.

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Which one of these are you going to take action on in the next 7 days? Comment below with your favourite you want to get started saving with!

Budgeting

How to Use the Envelope Budgeting Method

Posted on August 26, 2019

Budgeting Envelopes are a great tool to help you stick to your budget

The Envelope Budgeting Method is a great tool to help you with your Zero Based Budget to stay within your budget. It’s an easy method to track your spending in by category and to keep you informed of when you’ve spent your budgeted amount for a particular expense. If you are struggling to stick to your budget and finding trying to budget blind isn’t working for you, the Envelope Budgeting Method is a great way to give you some control and a birds eye view of your budget expenditure.

Cash Budgeting Envelopes

Generally the Envelope Budgeting Method uses cash that is divided up and placed into separate envelopes with an expense tracker on front of the envelope to tally up your spending as you go. Each time you spend money you would take the cash out of the envelope for the appropriate category, for example, if you were buying groceries you would take cash out of the grocery envelope, you would then note the following on the front of your Grocery Envelope:

Date
Store
Description and
Amount

You would then calculate what budget you had left over, by subtracting your total budget for the month from what you just spent and entering that amount in the Balance column. You would place your receipt inside the envelope.

I would avoid using cash envelopes to hold large amounts of money i.e. If you are using cash envelopes to save up for your annual Insurance or Car Expenses which might involve leaving hundreds of dollars around the house. For these, I would use a completely separate account for your Sinking Funds where you can put away for larger, ongoing expenses.

Digital Budgeting Envelopes

I have hacked the Envelope Budgeting Method which usually involves a cash envelope system after giving it a go for a handful of months and created a Digital Budgeting Envelopes which I found suited me more. It is essentially the same concept except it eliminates the need to carry around lots of cash and physical envelopes in your bag. It also eliminates the issue with couples not having access to the envelope when the other partner has it.

To use the Digital Budgeting Envelope you can track your expenditure in the digital envelope file via your Google sheets which you can access from your phone at any time and share with your partner so you can both access and update the same file in real-time.

Again, if you spend money here you would note the Date, Store, Description and the Amount but this time the final balance will calculate for you in the Balance Column.

The Digital Budgeting Envelopes also don’t require you to physically set up the envelopes every month, you simply duplicate the worksheet and just change the month.

Setting up your Envelopes

Cash Envelopes: If you are using the Envelope Budgeting Method with Cash Envelopes you can simply withdraw your cash from your bank account and put the cash into the envelope. Fill in the Category, Month, and Budgeted amount, print off your Envelopes and glue them onto your envelope (110x220mm).

Digital Envelopes: The best way to track your digital envelopes is to set up an account that will be used exclusively for your envelopes budget. For example, if you have 5 envelopes that you want to track and that total budget is $1000 for the month you would transfer $1000 each month to an account exclusively for your envelopes. If your envelopes start on the 1st of the month on the 1st you would deposit your $1000 amount and ideally have at least $1 remaining by the 30th or 31st to show that you are in budget.

What to do with Unspent Budgeted Amounts?

At the end of the month with the Envelope Budgeting Method for both the Cash & Digital Envelopes, the final balance of each Budget Category will be totaled so you can see what is left.

For example, if your monthly grocery budget is $400 and you’ve only spent $360 this month, you could either transfer the $40 to your savings or use it to pay off debt if you have debt, or you can carry that amount across to your next months envelope. So with the cash envelopes you would move the physical $40 into your new envelope for the next month and with your digital envelopes you could just add in a line at the top of your grocery list and just adding carry over from prior month and then adding a -40 and that will add to your total budget so the following month you would actually have $440.

With the cash envelope you would deposit your $40 into your account and move it to your savings or pay it onto Debt. Or you could add the $40 cash into your next month’s envelope, it is totally up to you. If you want to take advantage of being under budget, by all means, put it to good use and save it or put it towards paying off your debt!

With the digital envelope you would simply transfer the money from your envelope bank account to your savings or pay it onto your debt. Alternatively, leave the cash in the account which would carry over to the following months envelope.

Don’t forget to note the movement on your envelopes if you carry the cash over from prior month by adding a $40 into your prior month to show that money is allocated and adding a -$40 into the new months envelope to show that amount has been added to your new months budget for that category. So in this example the following month you would actually have $440 for your groceries budget category.

What if I am Over Budget in a Category?

It’s important to avoid borrowing money from the following month’s envelopes if you are over budget, this is a slippery slope and will become a bad habit you might never catch up with. Instead, borrow within the same month from other categories. In the above example, if you had $40 leftover in your Grocery fund and you wanted to buy some take out later in the month but had used all all your take out budget, you could carry that amount across to your Entertainment Budget. To do so you would add in a line in the Grocery Category: e.g. “Transfer to Entertainment” $40 and in the Entertainment envelope you would add in “Transfer from Groceries” -$40. Make sure to take the money out you enter the amount as a positive and to add it into the other category you pick it up as a negative! Double-check your balance to the right of the entry to make sure you picked up the transfer correctly!

Categories of Budgeting Envelopes

Budgeting envelopes are mainly designed to help you to control your spending in problem spending categories, those categories that aren’t always so easy to stay in budget. For example, you’re probably not going to go nuts buying excess petrol and your electricity bill might increase of decrease with the change of seasons but isn’t really going to blow out in a spending spree. But your clothing budget might and you might easily spend $800 on your groceries instead of the $400 you budgeted, so with the budget envelopes, we want to focus on the more fluctuating expense categories.

The idea is not to have 30 separate envelopes which will be too tedious and for little benefit, the goal is to stick to the main problem spending areas in your budget.

These might be:

Groceries
Miscellaneous Spending
Home Repairs
Concerts
Entertainment
Clothing
Kids Expenses
Alcohol
Beauty

or any other categories relevant to your budget.

Filling in Your Budgeting Envelopes

It does take some getting used to and get into a habit of writing down what you spent as you go and it can sometimes be a nuisance writing down what you’ve spent when you’re trying to battle kids and a grocery trolley through the car park, but there are ways to make the budgeting envelopes work for you. We want to make budgeting work around you, not be onerous and too difficult to maintain!

I came up with a slightly more flexible system that worked for myself with the envelopes. As I spent money, I would stick the receipt in my bag as I exited the grocery store or left the drive-through and then once I got home and unpacked everything, or had a moment spare, I’d then go and grab my receipt and fill in my envelope and record the expenditure.

Another method for people that don’t want to just fill in their envelopes 24/7 is to fill out your envelopes in smaller chunks. To do this I have a small plastic wallet in my handbag where I collate all receipts and once or twice a week I will go through those receipts and add them into my digital budget envelope or cash envelope. I will tick the top of the receipt on any that I have picked up and will also scan the receipt and save it in my Google Drive if it’s a receipt I want to keep a digital record of. Otherwise once I have picked up a receipt if it is for something I don’t need to keep I will just shred or recycle it once I have recorded the expense.

I do recommend when you first start your budgeting envelopes that you do fill them in frequently as you go, rather than chunk as you will be getting to know your budget and your budget limits and it will take a few months to get used to that and if you don’t update them as you spend you might find that you do go over budget, so until you feel confident of your budget, do update your envelopes as you go. Of course, if updating it as you go is your preference then just stick with that.

Storing your Envelopes & Receipts

With the digital budgeting envelopes I would suggest you keep one file for each year. Start a new one at the start of a new year, so you can choose whether you start that in January or July whether you want calendar or financial year. Set up your Google Drive folders or equivalent by expense category e.g. Clothing, Home Repairs, Warranty and so on so you can easily find your scanned receipts when you need them.

With your cash envelopes they will build up over time so I would suggest once every three months you take a photo of the front of any older envelopes for reference and recycle them. Then scan what receipts you wan to keep copies of, e.g. for returns, warranties, or for insurance purposes and shred or recycle the other ones you don’t need to keep like groceries, beauty expenses, etc.

And there you have it how to use envelopes for your budget. And to get you started I have a Cash Budgeting Envelope Printable and a Digital Budgeting Envelope in my store which you can check out. These come with detailed instructions for how to set up your cash or digital envelopes.

Do You Want to Learn How to Spend Your Money With Intention?

If you want to take control of your financial future, stop stressing about money and learn how to spend your money with intention, book in for your free Q&A call to see how Minimise With Me Financial Coaching can help you gain clarity around your finances!

You can learn more about Minimise With Me Financial Coaching services here.

This week’s comment question: Have you ever used budgeting envelopes? Did you find they helped you to stay on budget? Let me know in the comments below!

Budgeting

40 Frugal Ideas to Have Fun These Holidays

Posted on December 11, 2017

Being on holidays doesn't mean that you have to choose between fun our your budget goals. Check out these 40 Frugal Ideas to have fun on your holidays! Photo: Vicko Mozara (Unsplash)

With the holidays approaching it can be a great time of year to plan all those fun activities you’ve been wanting to do. Those ones you keep putting off because you didn’t have the time or money. Sometimes, maybe even the energy. Don’t let your holidays disappear before your eyes without feeling like you made the most of them. I’ve found that in the past, even when I’ve have a free day, it can be hard to think of fun things to do that won’t take up an entire weeks entertainment budget. All you need is a little creative thinking, you don’t have to make a choice between fun and your budget goals!

Being on a budget should not impede you from enjoying your break and having fun. When you put your mind to it, there are really a huge list of things that you can do for fun over the holidays, and they can certainly be done without spending a lot of cash! Plan ahead and rethink your entertainment options, they really are unlimited.

If you have particular interests not mentioned, this list could be even longer! Here are 40 Frugal Ideas to Have Fun These Holidays to get your started! Most of these are free or can be done with very little cost. 🙂

Have a Movie marathon day/night. Select a theme such as 80s movies, or your favourite actors films. Invite friends or family over and have a poll on what to watch.
Sit down with a partner or friend and listen to an album from start to finish reading over the lyrics. In today’s world of Spotify, Netflix and Social Media, this activity really does get pushed to the back burner.
Go star gazing. Go on a road trip out of the city and watch the night sky.
Colour. Grab an adult colouring book and some pencils and get colouring.
Read a book. Start a new book or read an old favourite.
Start to learn an instrument or if you already play one, learn a new song. Learning one with a friend – even better.
Cook a nice meal or learn a completely new recipe.
Bake dessert or a cake. Make something special like creme brulee or waffles.
Play a video game – if you’ve got your old Wii or N64 crack it out. Invite a friend or two over.
Invite friends over for a board game night. Ask your friends to bring over one game each. Ideas include Chess, Pictionary, Monopoly, Cards Against Humanity or Uno.
Watch a documentary about a topic you are passionate about. There are stacks on Netflix to choose from.
Watch a stand up comedy show, again there are heaps on Netflix. Or better yet find a free comedy night in your city.
Binge watch a new TV show that you’ve been dying to watch.
Have a picnic.
Go for a walk. Drive to a new area for a change of scenery.
Go out for coffee with a friend or relative.
Do something artistic; draw, paint, or get crafty.
Write something a poem, short story, or try your hand at writing song lyrics.
Go to a local BBQ area with friends. Bring some sporting equipment and have a few games.
Attend a free local event or festival.
Check out the library and read some new books.
Go to a free Museum or Art Gallery you’ve been wanting to go to for ages.
Take a drive to a national park for a hike or bush walk.
Grab the bikes and go for a ride with your partner or friend.
Swim at the local pools or go explore a new beach. Don’t forget to check out the rock pools!
Hire a kayak for an hour and explore on water whilst getting some sun and exercise.
If it’s a hot day, have a water fight. Hit up your local Kmart or cheap shop for water guns or water bombs.
Find a local pool-hall and play a few games.
Check out online event guides for free (or affordable) gigs.
Invite friends over for a cocktail party. Get everyone to bring a bottle of alcohol and juice/soft drinks so you can make a few different drinks.
Go to a botanic garden and explore the different gardens.
Take a trip to the city and bring your camera. Take photos.
Try and find cool cinema playing some unique movies. A foreign film, premiere film or old fave.
Check out Things To Do on Trip Advisor in your city and do what you haven’t done yet.
Go camping for the weekend. Or camp in the backyard.
Go to a Drive in Movie.
Redecorate your home. Shop your home for decor items to freshen up your home. Bring out a new quilt cover and sheet sets, put a new photo in your frames, put on a nice smelling candle and swap your decor items around.
Have a pamper night. Get in your favourite robe, make a DIY face mask & put a hair treatment in. Run a warm bath with some candles and chill out music.
Teach yourself a new skill you’ve always wanted to learn. How to sew, sing, dance, take photos. Look up videos on YouTube and start learning!
If you’re feeling extra motivated, get organised. Declutter the items in your home that you no longer need. Scan any old photos, or cards you want to let go of. Go through your wardrobe and cull anything you no longer wear. Tackle the kitchen cabinets and donate anything that’s not needed. You will feel amazing after all that excess is gone!

What Frugal Ideas For Fun These Holidays do you have? Share them in the comments below so we can grow this list even further 🙂

Need some tips for gift ideas this Christmas? Check out 10 Minimalist Gift Ideas that Add Value to Your Life – Not Stuff!