Saving

The discipline device to help you save

The easiest way to manage your finances is to budget. Budgeting allows you to understand exactly how much money you have to play with each month, how much you can save and how much you can enjoy. Once you have your budget set up and are ready to go, the next step is to stick to it. This is easy for fixed costs as you are hardly going to pay your gym extra for membership in a given month but it can be tricky on items like ‘social drinks’ when your friends start rounds and the night goes a little too long. This is where hard rules will save you. Enter the envelope system.

The envelope system is incredibly simple but it is its simplicity that makes it so amazing. Once you have your budget planned out you take all of your money for a week and split it into cash envelopes. If you have an envelope for social drinks, that is the most you are allowed to spend, once the envelope is empty the drinks must run dry.

The envelope system has proven to work very well because it hurts. You have to separate your money and see what your excess spending is doing. If your clothes shopping envelope is empty and you want to buy those new shoes then you have to break your own rules. It makes it tougher to do and you will find that you will force yourself to avoid it. 

While the envelope system is not exactly embracing technology, there is a reason for that too. Handing over our credit card has become too easy, especially with innovations like Paywave. By handling cash you get to really feel how the money is disappearing from your wallet. Of course, if you are a digital nomad there is the online equivalent too. Many banks now allow you to categorize your account by spending behavior. Online banks are increasingly introducing AI solutions that will tell you if you are overspending on groceries this month too. Try and embrace both of these physical and digital discipline devices to force yourself to save.

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