A friend of mine, a single mother of 33 years with her son, was able, with the help of her own three-stage budget system, not only to live on her salary, but also to pay huge debts. For a very long time I could not believe that the system actually works, but it quickly debunked my skepticism.
Creating a budget system
My girlfriend has been working as a financial consultant for a long time, so she has quite extensive knowledge in this area. However, after a divorce from her husband, her finances decreased significantly, so she had to develop her three-stage system, which allowed her and her son to lead a lifestyle that they really like, but at the same time live in such a way that they have no debts.
Her system is quite simple and is divided into 3 different methods that are used simultaneously - this is the calendar method, the salary method and the money envelope system. Surprisingly, a similar method of planning really worked, because it leads a busy lifestyle and at the same time paid off the existing loan in the amount of 200 thousand rubles.
Calendar method
The first step involves using a simple monthly calendar to document any expenses you will have this month. Examples of such expenses are rent, telephone and other bills, holidays, events and other expenses.
The whole point of this method is to record all your basic monthly bills. And then indicate which bills are paid from which funds received. My girlfriend uses a variety of colors to highlight various monthly events, including the dates when they will be paid.
Salary method
The second step in her system is to create a specific budget for each salary you receive. However, before creating budgets, it’s very important to understand and take into account how much you tend to spend. This may seem intimidating at first glance, but it needs to be done.
So your salary budget should include not only the expenses indicated on the calendar, but also other expenses like gasoline, food and entertainment expenses. Her special checklist has 4 sections - bills, sinking funds, envelopes and additional savings.
The billing column contains all recurring monthly bills. Sinking funds are spent on occasional expenses like spending on holidays and events. The envelope category is for registering cash that you set aside for necessary expenses like clothing, food, and pleasures. And as the name implies, additional savings represent the remaining funds that can be spent on long-term dreams.
Money envelope system
After successfully organizing your budget, the remaining funds can be used for other expenses.These are variable accounts, which may vary by month. In this situation, it is best to use only cash, because this way you can track your expenses.
So you can fully control how much you spend on products and other necessary items. In addition, in this way my friend monitors restrictions and does not spend more than necessary.
Recently, I started using its budgeting method and have already achieved quite a good result.
