Save Money with this Method

When I first started getting income, I told myself,

"Ha! I will save 80% of my salary and retire early."

Being the thrifty type, I knew this was easy to accomplish. Back in High School, I never ate during breaks and brought packed lunch. The only time I would spend is when commuting. When going places, I would walk. I am really your embodiment of "Matipid."

Going back, obviously, I wasn't able to save such an unrealistic percentage. First salary, I was able to save 50%. Month after month, my savings went lower and lower. Temptation was everywhere.

I decided then to take my financial ways back on track. I read a lot of money saving literature and scoured around the net for tips and I found some things in common.

All of the discussion regarding money is done for the long term, your retirement. In a sense, this is one goal in your life, have a retirement fund able to sustain you in your late years. But the question now is how to get there?

There are several methods discussed, some dealing with bank transactions. One method has taken my attention. It was so simple, yet so effective, and has no requirement.

This is the Envelope Method. What is it?

Magic's right here, folks.

It's partitioning your income into several envelopes and labeling them. What!? That's it? Shocked you right?

The secret here is that sense of accomplishment after you paid something, the acceptance that the money is gone. That's how it works.

When you put money in the envelope, it's technically gone and you have accomplished payment in advance. You won't have time to pay your bills all the time, so setting it aside on an envelope is as effective.

I started saving with six envelopes. One for savings, electricity bill, water bill, internet bill, rent and dailies, for food and other necessities. I started paying my savings first, then the dailies, then lastly, the bills. The bills are last in my case, because If I lack money for bills after paying everything else, they motivate me to secure more money through overtime and other jobs. At the end of every month, I always deposit my savings to the bank.

The advantages I got were overwhelming. I was never late on my bills, always had enough money from payday to payday and the sense of happiness that you have savings motivates you to work more. It was astounding!

As months pass, I started adding envelopes. For hobbies, computer upgrades, and gadgets.

What's the downside though, you ask? Well, it's still subject to temptation. Inside each of the envelopes are a stack of cash you can easily get, so why not indulge? Honestly, I have given in several times, but in the end, the empty envelope haunts me until I put money in.

The magic here is the psychology, and until now, I'm enjoying the magic.