It’s so easy to pay for things with your credit card, or to use one of the many “cashless wallet” apps that are becoming available. These things really do make life easier and far more convenient, but at the same time it makes us less aware of how much we’re actually spending. We can use our card or phone as a magic wand to just pay for things and only a few weeks later when we look at our statements (if we even do) can we see how much we spent. We will find though that we’re far more conscious with cash.
Being more conscious with cash
Since I’ve been tracking my expenses I’ve very quickly identified an area where I can save some money. I’m generally quite rushed in the mornings so don’t eat breakfast at home, and I’m certainly not organized enough to pack lunches for myself. And also, I’m a coffee addict and purchase 2 flat white’s each work day. I know it seems obvious that I should organize my life so that I can pack breakfasts and lunches, but that’s definitely not going to happen in the next few weeks. I’m two weeks away form getting married and life is chaotic. I’m not ready to make changes to my routine quite yet; there’s just too much happening.
The envelope system
I’ve decided to come up with a very easy solution, and something which my Dad taught me when I was still in school. See more on the envelope system here. Firstly, I need to work out how much I’m currently spending. Don’t worry too much about the costs or currency, you can do this calculation yourself.
2 x coffee = R40
Average spend on breakfast = R30
Average spend on lunch = R60
Total (average) daily spend = R130
Total (average) weekly spend = R650
* Note that I am just using averages to make life easier. No need to over-think this.
Now for the wonderful trick. Looking at the figure of R650 it seems quite steep. I can easily do with 20% less, and in fact I have rounded down to R500 per week. I have drawn the cash and keep it in my desk draw as all these expenses relate to when I am at the office.
Now that I have actual cash to work with, and an actual budget, it’s quite simple to stick to. Either I buy cheaper meals, drink less coffee or perhaps every now and then I bring food from home. Seeing how much cash I have left in the envelope each day motivates me to stick to the budget.
I know that saving R150 a week may seem minimal and almost pointless, but I’ll soon write an article explaining the value of this! The money can be put to great use with surprising results!
A challenge for you
So here’s your challenge. Identify an area of spending where you can use an envelope with cash instead of your card. This mustn’t be complicated admin, just one envelope for a specific area of spending along with the cash (per week or per month; whichever is easier).
Keep track of the results and let me know how it goes.