Recently, social networks have been flooded with a new financial trend – the cash envelope system.
Popular bloggers are actively sharing videos where they show off their colorfully decorated envelopes, distribute cash by category, and talk about their financial goals.
Videos on the topics of "envelope system" and "envelopes for money" are gaining hundreds of thousands of views, and the number of followers of this method is growing every day.
What's behind this viral trend, and why could simple paper envelopes be the key to financial well-being?
What is an envelope system?
The idea is simple: As soon as you receive your paycheck, you distribute the cash into envelopes, each of which is intended for a specific category of expenses.
When the money in the envelope runs out, spending in this category stops until the next month.
At first glance, the envelope system may seem inconvenient and outdated - after all, we have already become accustomed to instant payments with bank cards and smartphones. However, it is precisely this "digital ease" that often becomes our main financial enemy.
Contactless payment has made the process of parting with money so easy that we often don’t even think about the need to make a purchase.
One movement of the hand – and the new thing is already ours.
When money is physically in an envelope and not on a card, it becomes more difficult to spend it.
Why does it work?
Psychological effect
When you physically hand over bills rather than simply tapping your card to a terminal, you feel every expense more acutely. Research shows that people spend 12-18% less when using cash.
Full control
No impulsive or thoughtless spending
- Clear understanding of the balance in each category
- Failure to exceed budget
Simplicity and clarity
Unlike complex applications, the envelope system is intuitive. You always see how much money is left for a particular category of expenses.
How to Start Using the Envelope System
Analyze your expenses for the last 2-3 months
- Identify your main spending categories
- Set a limit for each category
- Prepare the envelopes and sign them.
- Withdraw the required amount of cash at the beginning of the month
- Distribute the money into envelopes
Typical categories for envelopes:
- Food products
- Utility payments
- Transport
- Entertainment
- Cloth
- Health
- Unforeseen expenses
Creative Approach to Envelopes
Financial bloggers often experiment with the envelope system, adding atypical categories.
For example, categories such as the "spontaneity envelope" for unplanned desires or the "self-development envelope" for investments in education have become popular.
Some people organize challenges like "100 days without spontaneous spending" or "52 weeks of savings", where each week they put aside an amount that is a multiple of the week number. Such experiments make financial management more fun and help you find your own unique approach to budgeting.
Conclusion
The cash envelope system may seem outdated, but its effectiveness has been tested by time. It is a simple and effective way to learn how to control your spending and achieve your financial goals. In the digital world, sometimes the simplest solutions are the most effective.
Try using the envelope system for at least a month and you will be amazed at how much better you will understand and control your finances.
Earlier I told you how to get rich in one year.
