For many people, the biggest challenge to living within their means is keeping track of their envelope balances and staying within them. It can be difficult to stay within your envelope balances, especially if you don’t always know that the balance is.
I often get asked for tips or advice on how to stay within the envelope balances as you progress through the month. When I am asked that question, I typically reply by asking how often they are logging in to Mvelopes. Generally the people who are having the most trouble staying within their envelope balances are also not logging in very often to the application.
Therefore, my first tip is to log in more often. The more often you log in to Mvelopes, the more in touch with your spending you are. I typically log in to the application 3-4 times a week. I generally only have a couple transactions each time I log in, so it only takes me a matter of seconds to assign them to their appropriate envelope spending accounts. I then review my discretionary envelope balances (Such as groceries, fuel, dining out, entertainment, etc.) and log out. It’s quick and easy, yet I always know what my envelope balances are so that I can focus on spending within the balances.
The next tip would be to manually assign your transactions for your discretionary envelopes. The automatic transaction assignment feature is great, but if used too much, you can get out of touch with your spending habits. When you manually assign your transactions to your grocery envelope, for example, you see the balance in the envelope change each time you assign a transaction. This visual reminder can help you to remember what your balance is and help you focus on staying within the balance.
Mobile access is another way to stay in close contact with your spending and your envelope balances. If I am in doubt about one of my envelope balances, I simply log in on my mobile phone and double check. If you do not have Internet access on your mobile phone, it may be helpful to print out the Current Envelope Balance Report and slip it into your purse, planner, wallet, etc.
The other challenge of course can be staying committed to not overspending, even when the envelope balance gets low. If you spend more than what is in your envelope, you are spending money that you thought you had set aside for other purposes… that could mean you won’t have the money to pay the mortgage, the insurance payment, go on vacation, or even buy holiday gifts.
It’s not always easy to skip a lunch or dinner out, or not run to the grocery store when you want to pick something up, but the only way an envelope system will help you improve your financial position is if you spend within your means, and that means sticking to the envelope balances. So, if the grocery envelope is just about empty, try making dinner for a few days out of what is in the pantry or the freezer.
-Jennifer, Money for Life Coach