With your first apartment, you start a great adventure… that of managing your budget. After a few weeks or months of struggling, some embark on a method that is effective to say the least, that of envelopes. The principle is simple, it is a matter of withdrawing from the distributor the amount you have left following subtracting charges such as rent, electricity or internet from your income.
Then, it’s up to you to distribute this sum in different envelopes, each corresponding to a type of expense (leisure, shopping, outings, savings, etc.). Before rushing headlong, here are some tips.
1. Clearly determine the expense categories
To succeed in keeping your budget correctly, you must first separate charges and expenses, whether they are fixed, fluctuating, monthly or annual. Take the time to define them and list them so that you don’t forget any: accommodation, shopping, outings, internet, telephone, leisure, insurance, gym, clothing, transport, electricity, birthday gifts, holidays, hairdresser, etc Some are taken directly from your bank account, note them too.
To help you, use your banking application and your account statements and go back as far as possible: some expenses are only visible once a year or a few times a year. Do not panic if you realize along the way that you have forgotten an expense in the list, because by having an envelope dedicated to contingencies, you will be able to limit the damage.
Also, do not ask yourself the question of sub-categories like “is cinema a sub-category of leisure? “, you will refine later. When you have determined all the expenses you incur in a year, separate them into two: those that will remain deducted from your account such as rent, internet, electricity; and those that you will, from now on, pay for in notes and coins such as groceries, clothes, birthday presents, etc.
2. Calculate what you will put in your envelopes
Then, you have to determine the amount of the “rest to live”, by subtracting the fixed and essential charges from your income, APL and scholarships included. This amount will be distributed in the envelopes, with variable amounts depending on the expenses and prioritizing some over others, according to your choices.
If you want to get an idea of what you spend in the year by type of expense to see what monthly sums you should put in your envelopes, start once more from your bank statements. The annual sum divided by 12 will give you the sum to add per month in an envelope!
Example: you bought four pairs of shoes during the year, at 70 euros each, or 280 euros over the year. In the “clothes & shoes” envelope, if you want to keep the same rate of purchase of shoes as last year, either you ask for them as a birthday present, or you put in 25 euros every month for your shoes.
You can group the types of expenses or not, it’s up to you: culture / leisure with cinema, restaurant, bar, books, etc.; clothes, shoes, outfits – if you’ve gone that far, etc.
Fill your envelopes by starting with rather constrained expenses like… eating at least twice a day, three with breakfast. As the expense is relatively constant, look at what you spend over a month or two, that will be enough.
3. Regularly reflect on your purchases and how you allocate your expenses
No question of feeling guilty as soon as you have to take out a euro from your envelope or that you have taken out one that you consider too much. So be careful not to be too strict, either when distributing the notes and coins, or when having to take them out. “Managing your budget allows you to gain self-esteem and it is essential to have a clear vision of what you earn, what you can have as aid and what to prioritize”, asks Nadia Chekkouri, Deputy Director of Budget Support and Social Innovation at Crédit Municipal de Paris.
In essential needs, we count “to feed, to lodge, to move, to take care of ourselves”, but also to maintain our social life “and to have fun”, she continues: “The budget is not only a constraint. We must continue to see our friends, take care of ourselves and create links with others, we must continue to fulfill ourselves. “The question of the relationship to money, what I feel and how I act” is important and is part, like the management of the budget or that of one’s bank account, of what Nadia Chekkouri calls “the fundamentals of budget “.
4. Think regarding pivotal moments…
Some expenses are annual one-shots: Christmas presents, vacations, a driving license or even… the absence of a scholarship in the summer! Do not forget them and every month slip money into your envelope (dedicated or global). Example for the scholarship, you know that in July and August, you do not have a scholarship, you will miss two months. Calculate how much two months of scholarship represent for you and divide this amount by ten to find out how much you should put each month in your “no summer scholarship” envelope.
For the license, it’s also simple: how much does it cost and when would you like to pass it ideally? Divide the cost by the number of months before you have to pay it, you will get the amount to set aside each month. Be careful on this point, the result must be realistic. If you have to put aside 300 euros per month to pay it and your monthly living allowance is fixed at 500 euros before distributing your money in your envelopes, your calculation is not correct.
Also, be flexible, at least in the beginning. The idea is not to manage to the penny, but to already realize your expenses and that you can think regarding them before making them.
5. … and savings!
One of the great advantages of the envelope method is the possibility of saving, even when you are a student and have little income. Of course, you need income for it to work, but even if it is not very high, thinking regarding your expenses and how you buy has many advantages, including being able to save.
“Even if these are small sums, we save either expenses, or for a project that is close to our hearts or precautionary savings. Also, not being able to is maybe something temporary! Finally, it’s something that builds self-esteem and is rewarding,” explains Nadia Chekkouri.
First thanks to a dedicated envelope: it can be 10 or 15 euros per month, or more if you have more, it doesn’t matter… the main thing is to devote an envelope to this savings. Once this security mattress has been created, you can even consider investing a little of your money followingwards. In this envelope, you can also put Christmas gifts from grandparents, unforeseen income such as a reimbursement from EDF if your schedule was incorrectly calculated (but in your favor!).
Another way to save is through monthly, annual or unlimited time challenges. The approach is playful, each time it is a question of playing small games to fill your envelope with challenges. It can be filling an envelope with 1 euro, then 2, then 3, then 4 etc. up to 50 euros, or to do a week without any expenses, or even the challenge of saving 500 euros in three months. The ideas are varied and can be made according to budgets and desires. You will probably not become millionaires, but you will have a little security in the event of a hard blow or something to treat yourself without counting too much.