Thank you for checking in for this week’s Friday Focus. Keep reading for the next 7 weeks to learn about different ways to save during the holidays with our Top 7 Ways to Give the Gift of Savings Series.
You may be familiar with Dave Ramsey’s popular “Envelope System” of budgeting. The envelope system relies on cash—you physically divide up your cashed paycheck into your budget categories each week to decide how much you have to spend on each.
For some, spending cash helps them stick with their budget. When they have to hand over a $20 bill at the store instead of swiping a card, they pay more attention to where that money’s going. Others, however, find that they track their spending better when they use a debit card and can view each transaction in Online or Mobile Banking. If that’s you, there’s a simple way to use the philosophy behind the envelope system to create your budget.
Open Special Savings accounts for each of your budget categories (food, gas, entertainment, rent or house payment, etc.). They’re easy to set up in Online Banking! Then every time you get paid, decide how much of your check goes into each category. If you haven’t tracked your spending before, it may take a few months to figure out how to best divide up your funds, so don’t give up! It’s okay to make mistakes at first and readjust your plan.
Then all you’ll have to do is transfer the correct funds to your checking account when you’re ready to go shopping or pay your bills.
Follow these steps to open a Special Savings Account in Online Banking:
(Click on an image to see it larger.)
1. Once you’re logged in to your accounts, click on the “Accounts” tab to open the drop down menu. Then click “Open New Account.”
2. You will be prompted to select the type of account you wish to open and give the account a nickname. Choose “Special Savings” and enter your budget category as the nickname.
3. The next screen asks you to confirm the details of your account. You will also enter how much you would like to deposit into the new account at the moment (you must deposit at least $0.01) and which account you would like that money to transfer to come from.
4. Enter your password to complete the process after verifying that all information is correct.
5. That’s it! Now repeat the process for each of your budget categories, and you’re ready to go!
Do you use the envelope system with cash or do you already use multiple accounts to help you budget? Share your tips with us in the comments!