November 25, 2013

One of the early budgeting techniques that I used is envelope style. It is a kind of budgeting wherein you will rely on envelopes with written specific kind of expenses to which you use your income or money.
Before I go into details how envelope style is done I would like to begin by defining the word BUDGET. Budget according to online dictionary is a quantitative plan for a period of time. It is an allotment you make for something that you have and dividing it to portions. In a budget the total must always be equal to the division that you make. 
Now that you have the idea about BUDGET I will then tell you about ENVELOPE STYLE.
The materials that you will need are envelopes and a marker. 
The idea about the Envelope Budget Style is in the each of the envelope you will write the item to where you spend your money at. In a common budget items will be the following, FOOD, TRANSPO, PERSONAL, SAVINGS and the one thing you should never forget to allot, TITHES.
Every pay day you will divide the money that you get to the following. You can follow the 10-20-70 principle where in 10% goes to tithes, 20% goes to savings and the 70% will be divided into three. 20% transpo, 20% personal (cinema, makeup, new clothes etc) and the last 30% will be for food.
In a month you receive 11,000 pesos in a month.
10% of 11,000pesos will be for TITHE ENVELOPE:                      1,100pesos
20% of 11,000pesos will be for SAVINGS ENVELOPE:                2,200pesos
20% of 11,000pesos will be for TRANSPO ENVELOPE:               2,200pesos
20% of 11,000pesos will be for PERSONAL ENVELOPE:             2,200pesos
30% of 11,000pesos will be for FOOD ENVELOPE:                      3,300pesos
                                                                                 TOTAL:               11,000pesos
Keep the envelope in a safe place and only get the envelope when you need it. For example since you have 2,200pesos allotment to TRANSPO and let us say that you work 5 times a week meaning 20 working days in a month. You may divide the 2,200pesos to 20 working days giving you 110pesos a day. So the main rule for you is to get 110pesos from the TRANSPO ENVELOPE every day of work so you will easily know that you follow the budget. You can also do this trick to FOOD ENVELOPE.
PERSONAL ENVELOPE can either be spent one time, big time if and then you have your needs like personal cosmetics and lotions and hygienic products that you really need. Or what you can do is save the half for an investment item like a branded bag or a branded perfume and just satisfy your personal needs with the other half. 
SAVING ENVELOPE is important and must not be spent if and then there are no emergency situations. This serves as your emergency fund. You may deposit it to your saving account if you have but if you don’t have then just leave it in this envelope.
TITHE ENVELOPE can be given when you go the service at church. This is 10% of your actual income. This is called giving back to God. I, myself will always put tithe first in my budgeting.
I do hope that you learned something from this post. Again this is called Budget series meaning I will have another posts concentrated to ways of budgeting your money.

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Clariza Glino

Izza of SavingsPinay promotes financial literacy for the young and young at heart by providing insights and tips on budgeting, saving, investing and online entrepreneurship. Aside from this blog she also writes at www.izzaglino.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at izza@savingspinay.ph