What is the 4 envelope rule? How to save money quickly? The easiest and most fun way is the four envelope rule.

09.11.202127.05.2017

The main goal that now faces me and my family financially is to learn to live within our means, not to spend more than we earn. And we have some long-standing problems with this (with excessive spending), but I’ve already talked about them, so I won’t repeat them.

To fulfill my intention this year, I lead, and recent months I'm trying to learn how to drive cash flows in his family, but this was of little use. Since August 1, I tried to use the “Four Envelopes” method to control family expenses. And today I would like to talk a little about the method and the results that were achieved.

August was difficult for us financially. One child had to be put into the third grade, the other into the first, which is much more expensive. My daughter needed expensive orthodontic services. It was necessary to organize a small birthday party. And many many others. It is clear that we have not accumulated any financial reserves to solve these problems.

In such a difficult financial situation, I decided to try the four envelopes method in action, so I didn’t have high hopes for envelopes.

What is the method:

Determine your monthly income.
We immediately deduct 10% for savings/investments.
We determine fixed costs.
We determine the amount of social spending.
We divide the remainder by 4.3 and get the amount that remains for a week of life.

It's simple, but, as it turns out, effective. You can read more about the method on the blog of its creator.

Of course, I didn't have any physical envelopes. On August 1, I put all the money on a Visa debit card, which I haven’t carried in my wallet since then, and all our income goes straight there. I opened a separate deposit for a financial cushion. Once a week I withdraw the required amount in cash. And of course, 100% accounting of all expenses. That's all, actually.

Calculations

When calculating for August, I didn’t bother too much. I didn’t want to immediately discourage myself and my loved ones from using the method, so there weren’t many restrictions.

I took only 10% of my salary for the financial cushion, utility bills, loan payments and communication costs (home Internet and mobile phones). Everything else was divided by 4.3. In one pile were the expenses for clothes, food, keeping a cat, and everything else. On the one hand, it was easier this way, because expenses from different categories balanced each other. On the other hand, many categories were disadvantaged.

When making the August calculations, we changed this scheme.

Secondly, we decided to allocate a specific amount for the purchase of clothing, which should not depend on how much ice cream we consume.

And thirdly, we decided to save money every month for gifts for family and friends. We were prompted to this decision, first of all, by the fact that the birthdays of our loved ones are unevenly distributed throughout the year, so in the fall the burden on the budget is high, but the rest of the time it is insignificant. So we decided to level this matter out.

The amount per week, of course, has significantly decreased compared to September. Which approach will be more convenient will be seen later.

Financial cushion

For the first time in our lives, we conscientiously put aside a tenth of all our income into a separate bank account. As a result, by the end of the month the size of our financial cushion amounted to 5,800 rubles. This is a considerable amount for us. Especially considering that my wife and I, apparently, are pathologically unable to save. This is a great achievement for us.

I will say without hiding that at the end of the month, we had to dip into the accumulated funds and spend 3,000 of them patching holes in the budget, which was knocked down by school expenses. We did not blame ourselves for this; the reason was that it was necessary to prepare for large expenses in advance, which was not done. In addition, the delay of the next salary let me down.

Week vs. month

In general, I can say that in August we did not always meet the weekly norms, but by and large we fulfilled the global task of not spending more than we earn.

We started spending less. What was the reason for this?

I blame our success primarily on the shortening of the reporting period.

I used to try planning a monthly budget.

This led to the fact that at the beginning of the financial period there was a lot of money, and the reporting day was often far away. This created conditions when you can easily and carefree spend left and right, but then 2 weeks before the end of the month there is no money left even for groceries.

By reducing the reporting period to 7 days, we have created a situation where there is never much money, and the end is always near. Even if there is no money for the last couple of days of the week, then you can somehow survive on bread and water for a couple of days, it’s easier than living without money for 2 weeks.

Tools

To manage finances using the 4 envelopes method, I use ZenMoney, about which I still can’t get around to writing a separate article. In principle, any program or simple table. It is enough to either divide expenses into appropriate categories or enter a new tag. All programs, of course, are designed for monthly planning, so when looking through reports, you have to select dates manually, but this is not difficult.

Total

We learned: save 10% of income.
We were able, albeit with difficulty, to spend only what we earned.

Everyone liked the four envelopes, we will continue testing them.

Many people wonder how to properly form a budget and get rid of unnecessary spending? In fact, this is not so difficult; the rule of 4 envelopes, which the women’s online magazine “Korolevnam.ru” will tell you about in this article, can help with this.

The key to the four envelope method is to take a few minutes to allocate your expenses and strictly follow these rules.

Why do our expenses exceed our income?

In order to correctly distribute the family budget, you need to understand one most important requirement - expenses should never exceed income.

Let's figure out where big expenses can come from:

— people do not count their monthly obligatory expenses, such as housing bills, utilities, and transportation. This also includes money spent on birthdays and other holidays;

- many indulge their whims, spending on restaurants, shopping, and expensive purchases amounts exceeding several months’ income, thus getting into debt;

- Many people rely on their “future income”, hoping to earn more in the future than they do today. Often these are completely unfounded hopes.

Get rid of unnecessary expenses and arrange financial well-being family is possible simple option – budget planning.

A budget is a determination of the amount that can be spent in a certain time without compromising finances and control over your spending.

The four envelope method: how to save wisely

How to learn to plan a budget:

2) be sure to set aside at least 10% interest on savings or in reserve. It’s better to do this right away, then it’s harder to part with the money;

3) set the amount of spending on mandatory expenses - bills for the apartment, utilities, Internet, telephone, school and kindergarten for children;

4) decide on spending on various holidays - birthdays of relatives, friends;

5) the remaining amount is divided into four envelopes - each envelope contains the amount that can be spent as much as possible per week.

This is how the four envelope method works.

At the same time, spending more than the amount in the envelope per week is strictly prohibited. In case of unexpected expenses, money can be taken from the reserve.

If the amount spent per week is less, then you can do the following:

— put money aside in reserve;

- place in next week's envelope;

- pamper yourself.

In order to save money and spend money more wisely, the first two options will be preferable.

The 4-envelope rule will allow you to intelligently calculate your budget and not allow yourself to thinklessly and unnecessaryly spend. For greater convenience, at the initial stage you can replace the number four with another. For example, it is convenient to divide 30 days a month into 6 periods of 5 days.

The transition to such budget planning can be very painful and difficult, but the result will not be long in coming and your financial condition will become stable.

There is no need to say that the family budget must be properly organized and streamlined. Only in this case will there be enough money for urgent needs, moreover, it will be possible to accumulate it for large purchases. And it doesn’t matter whether we are saving money from scratch or whether we already have basic capital, the main thing is to learn how to do it correctly and consciously.

Rules for constructing a budget

Moreover, this profitable and accessible option for organizing the material segment of life allows you to increase the amount of savings. First of all, there is a mandatory payment into investments and deposits, and every week you can save the rest of the unspent money from the envelope. It is noticed that life under the system becomes easy, and the family feels protected from sudden turns of fate.

Once a person begins to live according to the rule of 4 envelopes, he enters into a rhythm, his financial situation stabilizes, more opportunities appear. There are absolutely no shortcomings in this scheme - it is simple and understandable to everyone, and its possibilities are endless. Check how profitable this method will be for you, and how quickly your cash savings will be replenished, taking into account smart savings.

Many people are interested in the idea of saving money and planning their own or family budget. Some keep their own books, others meticulously outline future expenses. All this requires perseverance and self-discipline from a person, which many cannot stand and abandon this matter over time. In any book about finance you can come across the phrase that you need to spend less than you earn. It is excess unnecessary (sometimes completely unnecessary) spending that “kills” all savings and does not allow the budget to form. There may be several reasons for this:

Maintaining your social status (purchasing tickets to expensive clubs, expensive cars on a car loan, expensive clothes to surprise your friends, etc.). People believe that they are worthy of these joys, however, this is not a demonstration financial condition, but only a hole in your own financial accumulation.
Calculation of future earnings. Many believe that they will soon earn more than they spend today, thereby “sharing the skin of the uncaught hare.”

The key to a reliable future and financial stability is the method of planning your budget. One popular method is the “four envelope method.” It allows you to plan your income and expenses without unnecessary waste of time and nerves, learn how to save and properly distribute your funds. Let's take a closer look at what this method is, what advantages it provides, and does it really allow you to save and accumulate money?

"Four Envelope Method"

Users of this method have already appreciated its capabilities, forgotten about overspending, learned to properly plan future expenses and finally began to realize their goals without making much effort and not counting every small purchase.

The essence of the technology:

Determine personal (or family) income per month. Often income depends on external circumstances and can vary up or down. For example, if the salary varies from 25 to 40 thousand rubles, then it is worth taking the average value and, based on it, starting planning. In this case, let's take 30 thousand rubles.
Subtract 10% from the amount of income for savings or investments. It is optimal to open a replenishable deposit and deposit this amount monthly. Important, that cash you need to save it right away so that “a million necessary reasons” do not force you to spend it here and now. If the income is stable, then the contributions will be approximately the same. In the case of different incomes, you need to save at least 10% (if more, that’s also good). The size of this reserve fund should be equal to 4-6 months of income. This will serve as a safety net in unforeseen situations (for example, during a long-term illness). Based on our average income of 30 thousand rubles, we will save 3 thousand rubles each. After this, 27 thousand rubles remain.
Determine the amount of fixed expenses (those that appear every month), for example, for loan repayments, utility bills, cellular communication, Internet. Of course, the numbers here may be different. For calculations, we also take the average value of 10 tr. (5 tr. for a loan, 1 tr. rub – services, 4 tr. – utilities). Total remains 17 tr.
Determine the amount of spending on social needs. Every person needs some social communication, be it going to a cafe, getting together with friends, going to the gym, or other activities. You shouldn’t deny yourself this just because you started saving, otherwise you won’t be in any mood. Everything should be in moderation. Therefore, we determine that all this should cost no more than 5 thousand rubles per month. After this, 12 thousand rubles remain.
Spread the remaining amount over 4 weeks. This will be the fourth envelope. These funds can be spent during the month on other needs (food, shopping, etc.). Ideally, they should be divided into 4 envelopes (for each week) and try to fit them into the standard. If after all there is a sum left, then it is better to put it in the first envelope. If suddenly the set aside funds are not enough, then you can cut other envelopes, taking into account their replenishment as the situation improves. There is no need to hide that such self-control will initially be quite difficult and will require (moral) support. The transition from thoughtless spending to reasonable spending is painful.

Features of the 4 envelope method.

Envelope volumes will vary from time to time. If there is not enough money in one, you will have to take it from the other.
It is not always possible to save into a financial reserve fund.
The costs will not always be commensurate with the deferred amounts; sometimes you will have to spend more.

Advantages of the four envelope method.

Ease of financial distribution.
There is no need to waste time on analysis.
Formation of correct financial habits.
Ability to achieve future goals and plans.

There is nothing new or complicated about the “envelope method”. Therefore, it is used by adults, children, and elderly people all over the world. And it works better than many other newfangled methods.

However, many questions arise. How does it work anyway? What to do if there is not enough money in one of the envelopes? Is it possible to transfer money from envelope to envelope? How does this method work in the era of electronic money and bank cards? How many envelopes should there be? And so on.

How does the Envelope Method work?

You receive a salary (or any other income)
Defer and pay mandatory payments (mortgage or rent, utilities, loans)
You save for the future - 20% of what you receive in your hands.
Save 5-10% for big purchases (car, vacation, computer, etc.)
Distribute the rest (50-60%) into envelopes, on each of which you write a category and the amount you want to spend on this category per month (For example, “Food 10,000 rubles.”).

Objectives of the method

✔ The purpose of the method is to learn the basics of managing family finances
✔ Establish control over expenses
✔ There is no point in using the envelope method if you don’t want to change anything in your habits
✔ Aim Not is to force you to live like a soldier, limiting yourself in everything.

Examples of categories:

Nutrition
Entertainment + Cafes + Restaurants (recommended no more than 10% of monthly income)
Car (no more than 10% of the money in hand or 20% - including a car loan)
Clothing + Personal Care (5-10%)
Health + Sports
Education
Doctors + Medicines
“ ” (unforeseen circumstances, breakdowns, accidents, illnesses, loss of work, etc.)
Other (This category should not exceed 5% of your income)

Rules:

✔ You NEVER spend money from one envelope to pay for another envelope.

For example, if on the way to the store you forgot the “Food + Groceries” envelope at home, you come back and take money for food from there. If you pay at the checkout and your bill exceeds the balance in the envelope, you put the products out of the basket and eat the leftovers from the refrigerator, freezer, and kitchen cabinets.

✔ You NEVER use money from other envelopes. Excuses like “I’ll take it from another envelope now and return it from your salary” are not acceptable. This kills the whole point of the method.

✔ You NEVER use a credit card if you are out of money in one envelope or all of them. At this moment you admit to your family your lack of will.

✔ Changes to the envelope system are made once a month. If you made a mistake with monthly calculations, you will have to endure this lesson.

✔ If at the end of the month you have money left in some of the envelopes, congratulations! You are well done! You can spend this money as you want, or leave it in the same envelopes so that you can larger stock for next month. But it’s better if you save this money for the future (vacation, buying an apartment, car, children’s education, etc.).

✔ You definitely need to celebrate your small victories. No one wants or can live by constantly limiting themselves.

✔ Do not store savings (for a rainy day and for the future) in envelopes. Savings should be in a hard-to-reach place - a bank account, an irrevocable deposit, in another currency, etc. Otherwise, you will spend them. Checked!

✔ Don't fool yourself. Do not transfer from envelope to envelope, do not use credit cards, loans, nest eggs, etc. If you don't have enough willpower and discipline, just choose a different method.

What to do if there is a fire situation?

If you lost your job or got sick close person, the car broke down, had an accident, etc. and you don’t have savings “for a rainy day” - you can of course spend money from envelopes to solve such situations. After solving them, return to the “envelope method”.

What to do if you constantly lack money in one of the envelopes?

The answer is simple - either moderate your desires, or change the monthly amount on the envelope.