Your Fun Mileage May Vary

The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.

This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.

The principles that make a good budget, something you can stick to:

• Being Realistic: Being too strict is a recipe for failure.
• Making Adjustments: A budget is not set in stone, but a fluid thing.
• A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
• Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
• Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.

One very important reason, if not the most important of them all, when choosing to use your emergency fund, is the situation of necessity. 

Of course, if you have to, you should do it. However, you might want to pay attention to what necessity really means: if you can as well do without, then you probably should not spend your savings on that.

Whenever you have the impression that you should use your emergency fund, ask yourself if the situation really is urgent. If the answer is Yes, there is no time to waste. 

However, take time and be patient in managing different situations as, if there is no need to spend the money, than better not do it. Remember, it took time to build up that fund, no matter how big or small it eventually is.

Write it down when you’ve gone over your budget. The negativity you feel will help prevent you from overspending more or doing it again. Just think of this step as damage control.

If you try to deprive yourself too much, you’ll binge later and throw all your hard work out the window. 

A spending binge can set you back far more than treating yourself occasionally, so go for the occasional minor splurge. Just keep your treats within your spending limits and you’ll be fine.

A Reverse Budget looks at your current lifestyle and makes slow improvements over time until things are sufficiently better.

We look at how much we are spending eating out, commuting and daily indulgences and see the past quarter trends using your credit card and bank account spending.

When you look at our past spending patterns and trends, you can select one or two categories to focus and use one of these two approaches:

1. Tackle the high-dollar impact areas like housing, fuel, food, or healthcare, and see if those can be cut down to some extent.
2. Focus first on your 'disposable money' expenses like eating out, and entertainment and curbing those, gradually.

The New Year's resolution or 'action phase' is when you're highly motivated for change. Use it to set things in motion and automate as much as you can. 

• Put your bills on autopay
• Start using a savings app
• Cut out any subscriptions you don't really need.

If you don't have a plan when the New Year's glow has worn off in a few months, you will stop doing whatever you promised to do. 

To force yourself to stick to a budget:

• Write down everything you spend.
• Add it up at the end of every week.
• Submit a report to help keep you accountable.

Get a cheaper living situation: Live in a smaller house that needs less stuff to fill it or get a roommate.

The personal finance rule of thumb is to spend no more than one-third of your income on rent. 

If you can read, you can cook. If you can read and cook, you can use meal planning and prep to save time, money, and improve your health.

Base your menu for the week on two things: what you already have in the house and what is on sale at your supermarket.

• Regular Aerobic Exercise: Great for both your physical and mental health. Increases the production of dopamine and boosts creativity.
• Preparing Your Own Meals. It’ll take some getting used to, but it’s a habit that’ll boost your health, wealth and productivity. 

• Create a Household Budget: the best habit to help you save money. A household budget helps to encourage frugality and discourage impulse spending. You’ll feel more motivated to engage in other good financial habits once you’ve got this in place.
• Financial Audits. This involves frequent checks as to whether you’re spending your money as wisely as possible.

1. Determine how much you make on any given month.
2. List your bills: Once you determine how much money you'll make this month,  figure out how much money you need to spend next month.
3. Compare and contrast:  Once you see your monthly income and your monthly bills on paper, a clear picture of how much money is left over emerges.
4. Spend all of your money on paper: decide where that money will serve you best.
5. Track your spending.
6.  Make adjustments to get it right.

Debt payments may look confusing when you add it to the savings column. But the easiest way to build up a savings balance is not to have your money go toward debt. Once your debt is paid off, you can increase the savings.

Play around with your monthly budget to see where you can reduce your monthly spending:

• You could contact your internet company to get a discount.
• You can clip coupons and use rebate apps to spend less on your monthly groceries.
• You could set aside less for medical expenses if you have an emergency fund.