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Stories of inspiration from Smart Girl Stories across the globe. Saving Money: The Envelope Budgeting System

Saving Money: The Envelope Budgeting System

If you saved all the extra money that has passed through your hands, how much do you think you would have?

Maybe enough to take a nice vacation, but who are we kidding? Saving “extra” money is hard! For unexpected events, plans, things you want to buy, gifts, and more.

When we talk about money (and it depends a lot on your situation), in case you have a few dollars a month left over, the idea is not to be restrictive with saving but to be fair and know how to categorize.

That’s why today in Smart Girls Stories we interviewed Julia Fernández (@Julia_Budget), taking social networks by storm with her fun techniques and strategies for creating the habit of saving.

Starting to save money

Julia was living on a tight budget in college, but more than anything, she was unsure of how much money she had.

“I had a hard time cutting myself some slack because I felt like money was going where it didn’t need to go, and I felt guilty about it,” she said.

When you’re in college, being able to afford food, school supplies, transportation, and in some cases, a dorm room, usually means there’s no money left over for other things, or so Julia thought until she started getting her finances in order.

After stumbling upon a video on YouTube that taught the system of saving through envelopes, Julia found an option for saving her money: “The envelope budgeting system”

In the interview with SmartGirlStories, she claimed to have had a love for crafts since she was a little girl, and the envelope budgeting system brought her closer to it with ease. On the other hand, she realized how much her life could change if she changed her financial habits.

So she dedicated weeks to testing, learning, and experimenting with the system that worked for her.

What is the Envelope Budgeting System?

Saving money in envelopes is a dynamic of classifying money by category and adding a specific amount to each envelope.

In this way, your budget remains separate, and you avoid using money for things other than what it is intended for, for example, going out to dinner with your friends and taking money for food you will need.

This is not only a simple action, it can be fun, and it has a big impact on keeping your finances in order.

So Julia set out to try this method of saving for herself, and these are the steps she recommended if you want to try it, too:

  • Do a spending analysis: Before you decide what to save, you need to understand how much money is coming into your account each month. Either fixed or averaged if your income varies. Then consider how much money typically leaves your account during the month.

Some of the expenses you can write down are rent, food, personal and cleaning supplies, transportation, money for gifts, and going out with friends…

You should work out an average monthly expense, and you can do this by keeping track of everything you spend. That means the next time you buy groceries, keep the bill or write down the total on paper or in an Excel spreadsheet.

This way, you can assign an amount to each category; for example, rent ($150), food ($70), transportation ($50)… And so on until you’re done. Finally, add it all up, and you have an approximate monthly cost, and you will know how much money you need to be able to have peace of mind for a month.

Now that you know how much money you should have in each category, you can start with envelopes. Whether you buy them at a stationery store or make them out of paper, they should be waterproof and sturdy so you can put coins in them.

Girl Tip: Julia stresses the importance of avoiding idealized budgets that sacrifice your health, well-being, or even fun.

For example, if you enjoy taking a yoga class or buying a few coffees a month, see if, after covering your necessary expenses, you still have money left over to indulge.

Split your expenses categories

Now that you know your expenses, you can start dividing your categories:

  • Essentials: Money you absolutely must have for the month, such as money for rent, food, and other mandatory expenses.
  • Necessities: money for services or products that are necessary but not 100% essential, such as money for transportation, and school supplies.
  • Nice to have: Money spent on things you have for fun, such as movies, clothes, or other things you do not necessarily need; savings for gifts or travel can also come from here.
  • Shouldn’t have: refers to purchases that you shouldn’t have made or that you regret, this way you can see if there are patterns of constant purchases that you make and take action.

Finally, it is not part of the main categories, but it is ideal to have a place for it anyway:

  • Variable expenses: this is a more advanced technique for Julia, where she creates a category for those expenses that are not considered in any of the other categories, for example, your cell phone got damaged, and you need to buy a new one.

Normally, since this is a major expense, taking it out of the other budgets can unbalance it, so having savings in this category can help you surf these extra expenses more easily.

Of course, you can divide it into as many categories as you want, for example, “Vacation,” “Clothing,” “Education,” “Remodeling,” and others. The important thing is that you cover the essential categories first, and then you are free to distribute your money according to your lifestyle, tastes, and needs.

Now you are ready to put the money inside the envelopes! It’s time for the fun part – making your envelopes! Remember, they should ideally be waterproof and sturdy.

Here is an example of Julia’s TikTok account, although it is in Spanish, you can see the categories written in her notebook and see how she distributes her money.

Watch video

Julia inspires us because, although she does not have a Ph.D. in finance, she has shown with her strategy that you have to make the process of creating habits fun to increase the likelihood of maintaining them.

With her system, and even as a student, she has managed to buy what she wants, travel where she wants, and have a good lifestyle according to her income, thanks to her organization, perseverance, and faith in herself.

In the future, she plans to give courses to reach numerous people who want to learn this fun and effective method of saving in envelopes.

Finally, Julia left us with this powerful message:

“That you care about money and that you are careful where you put it without spending it does not make you greedy, you are simply managing your money, managing your money can give you much more than you imagine, it can give you opportunities, so if you are interested, start organizing your money”.

So, in summary, remember that the most important thing when saving money is to

  • Know how much money you make
  • Know what your fixed expenses are
  • Create a budget for your variable expenses
  • Categorize your savings (vacations, gifts, projects…)
  • Last but not least, invest in yourself! From taking personal finance courses to spending a few hours creating an Excel spreadsheet to track your financial movements, you will be amazed at the immense difference that organizing your money makes, no matter what your age.

Trust me, your future self will thank you.

Read more powerful stories by bold journalists on our Inspiration page and don’t forget to follow us on Instagram!

Valeria Morillo

Valeria Morillo

I live for content and storytelling, working hard to get you to meet awesome women across the world! Marketing strategist, voice over andjournalist.


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