In the age of the rising price of a commodity, you will never able to deal with the expenditures without a proper financial plan. Sometimes people use a credit card to buy unnecessary things and at the last of the month, paying utility bills such as water, electricity and gas bill become tough for them.
If you find difficult to settle down the known expenses, then you are in deep trouble. Think about what will happen when you will meet with the unexpected expenses? So, creating an effective budget is very crucial. Though you do not know about the future you can easily pay the unexpected bills whether it is related to medical or household. You might want to know the ways, here we have mentioned a few ways to direct the surprising cost.
1- Break the emergency fund: If you are good at budgeting then you must deposit some money for future expenses. You can break that fund and can easily face the surprising cost.
2- Borrow money from your relatives or friends: This one is a simple way to arrange money but in this, your close one must agree with you otherwise they will deny your request.
3- Loans: This one may be the best choice for you because there are many online lenders in the UK who offer bad credit loans with no guarantor where your credit history won’t play any role.
The above-mentioned ways may help you to supervise the cost you have never expected but you have to follow the strict plan to avoid situations like running out of money at the last of the month. There is one best solution which can definitely help you and that is ‘ENVELOPE BUDGETING’.
You probably have any idea about this but if you not, read the blog until the end.
What is Envelope Budgeting?
This is a very effective and visualization way to maintain a flexible budget. In this, you have to prioritize the income to meet different categories of household expenses. It may seem tough and it is actually. Many people find it difficult to follow but with a proper routine and discipline, you can easily pay off your all bills on time.
It is not that simple, you have to know how to use it. There is no place for worry because we shared every single piece of information about it.
How to use the envelope budgeting system?
There is no rocket science behind it, once you decided to choose this, then starting is easy for you. Follow the steps mentioned below:
Step 1: Determine the expense and income
In this, you have to find out the total income of your house and the expenses such as rent and bills and write them all in one paper. You can use previous bills to estimate utility costs such as water and gas. Once you complete this, now subtract the expenses from income.
If you find that the balance is zero or positive then you are going good but if you get the answer is negative, then you have to cut down the unnecessary expenses.
Step 2: Imagine you are getting salary after two weeks
Even if you are receiving a salary in a month, you have to consider that in weekly. Divide all your expenses in half. For instance, you are paying 200 pounds on home loan then, take it as 100 pounds. In this way, you will not feel pressurized to clear your debts or expenditure.
Following these two steps may be challenging for you but not impossible. We have mentioned some tips you must remember while following the money envelope budget.
Tip 1: Support from family
Your family should know about this planning so that they can also support you.
Tip 2: Get out of the comfort zone
You have to make a tough decision like avoiding a party or buying costly coffee. It is not easy but you should follow it.
Tip 3: Discipline is the key
Without discipline, you will never able to achieve anything. You have to be constant and stick to the decision you made. It seems challenging but it can give you many benefits and this is the only way to get succeed in envelope budgeting. The main motive behind this budgeting is to break all the expenditures and pay them according to their priority either by using your savings or through borrowing options like installment loans that you avail even with bad credit. You can see it is not that tough to initiate all you need confidence and consistency. It may happen that you fail in starting one to two months but after this, you will adapt it and easily manage all the household expenditures.