Over the years, you will come across several budgeting methods that claim to be the best in the industry. The problem here is that these methods are usually not as good as they are marketed to be. Whether you follow the 50/30/30 rule or the 80/20 rule, it is highly likely that you will default on payments and ruin your budgets. For times like these, you should depend on a trusted lender like HeartLoans.co.uk. They provide quick and hassle-free funding at reasonable rates to help you achieve your dreams and make ends meet when times are tough.
Considering the current economic situations, it is highly unlikely that the economy will flourish. After moving away from the European Union, Britain has out a lot of things at stake. It will have to reinvent its economy to stay relevant in the world of trade and finance. In hard times like these, there is one budgeting method that will help you make the most of your income. It is an old, trusted and tried method known as envelope budgeting that could help you in keeping credit card balances low while paying for everything you want. Want to know how this method works?
Money in an envelope
It may sound a lot like what our grandmothers used to do when creating a monthly budget. All you must do is find out some expense categories and create an envelope for each of the categories. You should also create one envelope for savings. Now, take out all your salary in cash and distribute in these envelopes. Your only job now is to maintain discipline in your life. Never spend more than what you keep in these envelopes and pay everything with cash only. This is an extreme savings method and is very good for people who already have a big credit card debt to pay.
What are the advantages to this method?
By paying everything in cash, you have the option to limit your spending. Most of us don’t realize exactly how much we are spending when paying with a card. However, when we use cash as a preferred payment method, we become more mindful of what we are spending. There is an unnecessary and totally bogus concept that paying in cash is a bad idea. However, it is not such a bad thing. You can pay in cash wherever you like and even keep exact change for things you are buying. This small step will bring a lot of financial discipline in your life.
Another reason this method is important is because it creates a psychological barrier against spending too much. You know that a designated envelope decides your spending limit. Though it isn’t hard to pick up a second envelope and start spending like usual, you will note that your mind automatically stops you from doing so. This, in turn, helps in making you more responsible towards your financial actions.
Have you ever tried this budgeting method before? Why don’t you give it a chance? Experiment for one month and then share your experiences with us.