Monday, March 20, 2017

Budget Envelopes - Squirreling Things Away

Have you ever noticed how many people think squirrels are cute?  Aww...look at those whiskers, cute eyes, and fluffy tails.  Those fluffy tails are the only things
that distinguish squirrels from rats.  Give a rat a fluffy tail and you have a squirrel.  Maybe I'll start making fur coats for rats' tails.  I could sell them on Etsy.  Rat parents would buy them and then...never mind.  The rain is sogging my brain.

One interesting thing about squirrels is that they bury their nuts for the winter and they actually remember where they put most of them!  They have this impressive mapping system in their brains that enables them to retrieve the nuts throughout the winter.

Budgeting is like nut mapping.  You have to sock a bunch away so that you can take an earlier exit ramp, then you have to manage it so that it will last until you die.  Hopefully, that is a long time away.  How to make the nuts last through that long winter?  Envelopes.

When we were young and living on $2.83 an hour wages, the envelope budget method worked so well.  Each budget category had an envelope with an amount written on it and money would go into each envelope.  Some envelopes were emptied every month (utilities, mortgage, groceries, etc.) and others carried over for when they were needed (property taxes, house repairs, car repairs, etc.). It was a simple yet effective method of managing money.

As we got older and worked our way out of poverty, we saved as much as we could every month and lived on the leftovers.  We stopped using envelopes because we had a cushion to fall back on.  Now that we aren't working, we have to pull the stuffing out of that cushion. Pull out too much, we'll fall flat on our asses, pull out too little, we'll leave a nice big cushion for someone else.  Screw that.

Since we don't know how long we are going to live, we have to plan as if we have "Blue Zone" genes.  These folks live longer than most other people.  Back to budgeting envelopes.

When we were young, budgeting envelopes were easy because we used cash.  You know, that green paper stuff that smelled kind of like sweaty socks, but for some reason was the best smell in the world?  Now, we use plastic for everything.

Reward cards that give cash back give us a 1-3% rebate on all we purchase.  It's a convoluted way of earning additional interest on our savings.  The problem is, studies have shown that people who use plastic spend more because they are removed from their money.  They don't physically have to part from the smelly green stuff.

To manage and track our expenses, we have been using the Spending Tracker app by MH Riley Ltd (Google Play or Apple) We started using it over a year ago to track everything we spent to ensure we could afford to quit working.  Now that there is no income, we have to go beyond tracking and back to budgeting.  This app allows us to create various accounts (envelopes) and they can be set to expire each month or carry over as needed.  The app is free (or $3.99 if you want to get rid of ads and sync across devices - we felt this splurge was worth it).  The other apps we looked at were intrusive and required online sign ins.  This one allows us to keep our privacy and does everything we need.  We don't get royalties for recommending this app.

One bug in the app is: if you set a category to carry over, but you haven't ever spent from it, it doesn't carry the balance over.  My simple work around was to spend $1 from every category when I set them up, now everything rolls over as needed.

Let me know if you try this, or if you have any tips to share.

No comments:

Post a Comment