Saturday, 8 December 2012

Watching your finances when unemployed.

I previously wrote a post called “my finances – where the hell do I start” – looking back at that post has been a great inspiration to me recently.  Between my recent unemployment and the fact that we are approaching a new year I thought it was a great time to revisit this post and get some new focus on my finances.

Revisiting this post has re-established for me the importance of the envelope system.  Putting cash in to a relevant envelope so that you can spend it each week on the relevant items you intended it to be spent on.  Note the important word, intended.   The rules of this system are simple and work whether you are being paid weekly or monthly.

·         Work out your budget – what money do you need for the coming week / month?
·         Divide that money in to the relevant categories such as car fuel, groceries, kids clothes, dining out, clothing.
·         Label your envelopes with the relevant categories.  You may want to leave space to write down how much money you are putting in and then where the money is being spent. It will be a quick reference for you throughout the week or month.
·         Put your money in to the relevant envelopes. For example if you have budgeted 300€/$ for your groceries put that in the grocery envelope. Do the same for every other envelope.
·         Only use money in a specific envelope for a specific item.  Don’t be tempted to take money from the grocery envelope to put in the dining out envelope.  You are defeating the purpose.   If you do this than it is more  likely you will  not have enough money left to eat for the rest of the month. 
·         If you realize that a budget set for a given category isn’t realistic, discuss it with your spouse and consider adjusting that category.  If you don’t have a spouse maybe discuss with someone else who will help you keep on track.
·         Have a goal in your in sights.  Whether is a new dress that you want or to pay off a larger bank debt.  Any money that you have left remaining in these envelopes at the end of each week or month should go towards that. 

Ever since I started using the system I have found it beneficial, but even more so since being unemployed.   My money is now limited and this system has kept me completely focused on my money and budget.  More now than ever I need this envelope system.  It is so easy and simple that I can’t figure out why not many more people are using this every day. 

Being unemployed in the first place is hard, having limited money is even harder.  But why not try and make it easier if you can at all by trying this system.

 Do you have a goal in mind? Are you considering using this envelope system? Have you used this before and do you have any reviews on it – let me know in the comments.


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