My grandmother often wrote her budget on the back of old envelopes.
I marveled at how Big Mama, a nursing assistant, managed to stay within budget making just above minimum wage while raising five grandkids – without the help of state aid, which she was entitled to but nonetheless refused.
But Big Mama’s skills went beyond just drafting a budget. Despite all kinds of financial mayhem, she was able to stick to her budget, never once paying a bill late or using credit as a crutch in leaner times.
A lot of people can draw up a budget, but it’s worthless unless you can maintain it. So how did a woman making so little manage to follow her budget? Let me share with you the secrets of Big Mama’s budget system.
The first thing my grandmother did was to automate her savings. She had part of her paycheck automatically deposited into a no-fee credit union savings account. This was her emergency money. This system will only work if you put up roadblocks that will make it harder to dip into this account for everyday living expenses. For example, don’t get an ATM card when you set up the account. Choose an institution with few branches.
The next secret to Big Mama’s budget system was to keep track of when her bills were due. This too she did on the back of used envelopes.
Also, negotiate with creditors to change your billing due dates. By controlling the dates, you avoid having all your bills come due at the same time.
To keep track of what money was being spent, Big Mama used the envelope budgeting system. Simply, when my grandmother got paid, she would divide the money into various envelopes for her mortgage, telephone bill, car payment, etc. Once the money was gone, that was it. She rarely borrowed from one envelope to make up for a shortfall in another category. Of course, you may not want to put your mortgage money in an envelope.
If you like the concept of the envelope system but don’t want to carry cash around, try Mvelopes Personal (mvelopes.com). Mvelopes is a secure online version of the envelope system. With Mvelopes you can divide your money in your virtual envelopes. Within each envelope you electronically track your transactions. The service links directly to your bank- and credit-card accounts, allowing you to download transactions in real time. The system links to more than 13,000 financial institutions. You can also pay your bills online.
There are prepaid fees for whatever plan you choose. Mvelopes is running a 30-day free-trial offer, so test the system and see if it helps you stick to your budget.
If the envelope method doesn’t appeal to you, then get a money-management system, such as Quicken or Microsoft Money.
Contact Michelle Singletary c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071 at singletarym@washpost.com.
