We are all being told a lot recently that there is more money available, with new jobs being created and the amount of people out of work is is slowly coming down or the everyday family have a little extra in their pocket because they are starting to buy on the high street again. But in reality there is no real change to families finances with wages being decreased or frozen, food prices and household utility bills still on the rise. So therefore as quick as the wages are coming into the home, its flying back out the door to pay mortgages/rent, household bills and food leaving nothing but dust floating in the air by the way our money moves so fast.
In our house my husband is the main wage earner and he gets paid in cash due to his job (taxi driver) so this system is easier for us to do. (saves a trip to the bank) If you have your wages paid into your account it will involve you taking your wages out of your account each time you are paid. But believe me it will be worth it in the long term!
The next thing you need to do is remove all debit, credit and store cards from your wallet and put them safe somewhere in your home. (If they are out your wallet there is less temptation to use them) This could be anything from your knicker draw or a small box that can live on a shelf.
Ok so we have safely hidden our cards and now we have all this cash in front of us what do we need to do?
- Take a pile of envelopes (we use glass jars as they can be reused each time and also you can see the money in them) Label your envelopes or glass jars with every bill (don’t forget food when doing this) so for example you end up with an envelope saying electric, another saying gass, another one for petrol, mot, council tax, car tax, food, birthdays, holidays and so on. (Make sure you have a contingency one, this allows you to have money for when something breaks down like the washing machine or car.)
- Place in each jar the exact amount of money you need to pay for each one. For Example in our house for electric I put £20.00 in, for food £40.00, Petrol £20.00 and in our birthday/Christmas jar I put £5.00 in. (Please note we get paid weekly, if you get paid monthly then put in what you need for cover those things over a month.)
- If there is any money left over add it to a bill that is not a utility bill. So if you have a store card, catalogue or anything on personal finance. (This way these things will be paid off quicker reducing the amount of hard earned money you have to spend out in a few months time)
- Now take any of the envelopes containing money that is taken out of your bank by direct debit so that can be paid as usual. (This may be your utility bills, car insurance etc..) If you can arrange for these payments to be made over the counter at your local post office rather than through direct debit the better. Because the feeling of handing over money direct in cash and receiving a receipt for paying that bill does something very special to our thought process about the concept of money. (Paying direct debit or with a plastic debit card seems to devalue money to us which is why we all over spend.)
- Its important to remember you only have the money you have dedicated to each item to spend on these things. For Example if you have put £100 in the food envelope for a week, then thats all you have to spend on meals, pack lunches, food and drink. (bought in coffee shops or the sandwich bar, restaurants and bars) Once the jar is empty there is no more money until the next pay day!
- Each time you pay something or buy something place your recite into your envelope or glass jar. Then at the end of the week or month just before you are paid look at what you have spent as this is where you will learn what you could cut back on and save so you don’t spend as much next time. For example this could be as simple as only having a Costa coffee twice a week on the way to work instead of every day. In my case when we started doing this I realised how much money I was spending on passiflying our children when we went out. I was buying a bag of sweets here, a small toy there and magazines. (I spent a lot on their magazines) That now those things are not the norm but a treat when we go out if I can afford it. (Not that I can afford it very often)
Just by following these few simple changes over a year you will notice that bills are being paid either completely off or nearly off, you’ll have more control on where your money is going, have a better relationship with money and have some savings to go on holiday or buy something nice for your home.
My husband and I started following this simple system a year ago after one night we sat and had a conversation about money. My husband just said “I work all these hours but we never seem to have any money and nothing seems to be being paid off” Now a year later we are on target to be debit free in a years time, we have control over our money and we can see where our hard earned money is going .
How do you take control of your money?