Friday, July 13, 2012

Managing My Cash: Cash Envelope System

Today's post is quite lengthy and serious..
Don't bother to read it if you're not interested.
When it comes to budgeting, I've always have a weak heart..
I always overspend..
So when I've started my part-time job last year, I have to develop a system so that I don't overspend and I want to manage my spending wisely..
Without depending on my parents anymore..
So I adopted a cash envelope system..
Everytime during my paycheck, I will divide all my money into separate envelopes according to the necessity..
In 2009, Dave Ramsey also proposed this system..
But honestly, I don't even know him back then..
It is a system I picked up from my mother..
She is really good at budgeting..

I have been doing this system for more than a year and it works really well for me..
And I want to share it.

1. I categorized my spending i.e petrol, daily, rental etc.
2. Before my payday, I roughly estimated my earning and started budgeting. If I earn more than I've expected, the extra will go into my saving envelope and my miscellaneous envelope.
3. During payday, I divided my cash and filled them into the allocated labelled envelopes.
4. I never tempted to use the cash that I've alotted for other necessity. Once I've spent my cash for a given envelope, I will not touch the others unless it is for emergency.

Here are my budget lists/categories for a rough idea:

Parking - My work requires daily parking fee, so I count the cash I need for parking
Example: RM3 x 30 days = RM90
So, any leftovers from this will go into my alotted funds

Daily - It's actually my daily meals money. But putting food as a category makes me look like a glutton so I change it into 'Daily' so it looks more sophisticated. Hahahaha..

Rental - need explain eh? >__< 

I.O.U - During my economic crunch *I have my economic crunch??haha*, I have borrowed a lot from my friends and family. It is not something that I'm proud of. So I've started to pay them back slowly, one by one.

Miscellaneous - Toilettries, contact lenses, clothing etc.

Tuition Fees - Now that my scholarship has ended, I have to self-finance my master degree now. So I alotted some for my fees.

Saving - Not much but at least I did some saving

Funds - This is what I'm talking about earlier. Everytime I have leftovers from any of the categories, I will put them into this envelope. Right now, I need a new laptop, so I'm saving this to buy a laptop. :)

Petrol - I own a car and I drive to work, so it is important.

Transition of my Cash Envelope System

This is the exciting part for me. First, I used money envelopes that I got for free from the banks
Then, I've spiced up my envelopes by buying kitchy envelopes from Daiso.


Then, after browsing the net, I've found a way to make my own cash envelopes!!


I made the envelopes from scratch! I will show you in my next post.I'm quite proud of them even though they were a bit distorted..Hahaha..What to do. I'm not really artsy.. ;p
And I improvised it by using an organizer and added some blank papers for me to write down my spending. *You know, to trace them back, just in case.* And tadaaaah! My own cash organizer.



Have any of you done this system?
How do you find it?
Share it with me!






8 comments:

  1. Wow, that is like super organized. I'm those type that never bother to do budgeting- probably sbb mak bapak is with me. In my life, i never suffer from low financial yet...so FAR.

    I loved all your envelopes! So gonna steal them!!
    You're really lucky for being under scholarship, I'm now crying due to my ptptn loan. Hutang overload!

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  2. Vee, I also have hutang..I'm not qualified for ptptn, so I took loan from Penang's government for my degree. So now the payment is waiting for me in 2013..hahaha..rm350/month..I'm soo going crazy..haha..

    Make sure don't do my mistakes! My envelopes look so cacat..hahaha..

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  3. RM350 per month, that's like a LOT!! I loan around 64K. That would be around 370 per month. GIlababeng betul, mahal T__T.
    How I wish i didn't slacked off so much during my college time. If only that GOV announced earlier, i could be studying madly ( ptptn mansuh for first class student )

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  4. Hahahahaha!! I loike your 'gilababeng'..I know..my first class friends all went mad with joy..hahaha..sadly i slacked off too..during my 1st 2 semesters..After that baru nak insaf kembali ke jalan benar..hahaha..tapi sudah terlambat..nasi suda menjadi bubur..bayar la pinjaman tu kan? hahaha..

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  5. I have read so much about this envelope method in budgeting and how many people have found it very effective. I think the reason why it has been effective for most people is because you separate your money, allocating an amount to each category of your expenses. The money being placed in an envelope, somehow psychologically stops or controls you from taking money from the other allocated expenses. It is also good that you list down your daily expenses for you to be able to monitor how much you have been spending each day and to know if you are sticking to your budget.

    Valencia Paz

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  6. Like I said, it is a habit I picked up from my mom.. I always have a weak heart everything I shop.. This system really helps me. But certain people labelled me stingy because of this system.. This saddened me though but at least I don't burden them.. I earned this cash hard way..

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  7. Hi Anne! Your envelopes are really cute! I am glad that the envelope system helped you in managing your money too. Don’t worry about people telling you that you are being stingy. It has nothing to do with that. What matters is that you are able to save the money that you worked hard for. And yes, it is great you are not burdening anyone with your financial matters because you can manage on your own. You are actually being considerate of the people you care about. I think that is very nice of you so cheer up!

    Era Kehoe

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  8. I’m using this envelope system when I got married. Though my envelopes are not as fashionable as yours, I was really strict about the money that I stored in it. It’s hard to hide our budget in the envelopes at first since I can easily get back to them and spend it, but I eventually got used to the system. I’m glad that this process worked for you like it did for me. I hope that you’re having the financial freedom that I have now with the help of this simple budgeting system. :)

    Saturnina Corbeil

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