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THE ENVELOPE TECHNIQUE For many years this technique has helped us. This is finance at it's simplest. Label envelopes for expenditures like "Clothing", "Travel or Vacations", "Car Repairs", "Christmas Gifts", "Household Repairs", "Entertainment" and add your own? Some of these envelopes require a predetermined amount each pay period while the others get what is left. Let's start with the "Car Repair" envelope. If your car repairs and maintenance cost $500 last year you can expect to spend at least that much this year. The problem is that you may spend $20 this month and $200 two months from now. Try putting $10 each week in the "Car Repair" envelope. Hopefully when the next repair comes up you will be ahead of the cost with your saving. Clothing expense probably stays steady each year. How much do you spend each year? Divide the amount by 52 and put away that much each week. If you miscalculate you will have to borrow from one of the other envelopes. This is where priorities come in. Are you going to borrow from Entertainment to help the Clothing purchase? The envelope method of saving helps visualize priorities and trade offs. Bob Berens, Copyright Pending |
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Copyright © Love Lines 2007 |
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