28 July 2007

Organising your money

We are going on a short holiday soon. It will be a trip on the tilt train to visit good friends in Townsville, about 2000 kms north, in the dry tropics. We saved the money for the holiday from our meagre monthly allowance, by putting whatever was leftover in to our change jar.

Let me explain.

We spend $355 a week, or $1420 a month, on everything we need. Of that $1420, $765 is put in the bank for our fixed expenses like payments for rates, electricity, phone, car and dog registration, insurance - health, car and house. When the bills come in, the money is already there waiting, the bills are paid by direct debit. Any money left over in this account is transferred to a no-free interest bearing ING online account and goes towards our savings.
Out with the old and in with the new.
This is the leftover cash from last month to put into the change jar,
along with a new allocation of cash for this month.

We also withdraw $655 in cash and that is the money we live off for the month. That covers food, petrol, garden, dogs, cat and chook food and flea and tick meds, medical and chemist, postage and house maintenance. We also give each other $40 a month pocket money. Yep, ten dollars a week to be spent on whatever our hearts desire.

I have a number of ziplock bags and I put the allocated amount for all the above items into each bag. So I have a bag with $50 for chemist and medical, a bag with $250 for food, a bag with $50 for the animals etc. Organising my money this way has helped me a lot with budgeting and knowing when I've reached my limit. Actually seeing the money separated in the bags has been the one thing that's kept me on the straight and narrow. When nothing is left, well, nothing is left, so I can't spend anything. But I always have money left over. Usually it's about $60, this month it was $65 and that goes straight into the change jar.

My change jar is an old Carl Larsen tin that hold all our spare coins and notes. If I have any coins in my purse after shopping, they go in; we sell our eggs, that goes in; money left over from our month's budget, that goes in. I now have $255.40 in my change jar. We haven't given up anything to save that money, it's just leftover cash, that we SAVED. It's easy enough to go out and spend it, but the trick is to not spend and SAVE instead. That $255.40 might not seem like much in the overall scheme of things, but when it's collected from a very tight budget, it's not just a big saving, it's a confirmation that it is possible to live well and be happy while spending very little.

The coins from the change jar - the notes are out of shot.

We do have our pocket money to spend during the month and although H always spends his, I hardly ever do. Not spending becomes a part of you after a while and spending on unnecessary things seems kind of wasteful. In the old days I would have thought nothing of spending $10 on a magazine, now I think it's pointless. So I usually save mine for the makings of small gifts - fabric or yarn and the like.
All the bags full for the month and my $40 pocket money for my purse.
I have two purses, one for my money, one for household money.

I have to say too, that organising your money like this takes the thought of it away from your everyday life. You don't have to think about money because you know it's all taken care of and waiting in your bags to pay bills and to live on. You stop worrying about money, you don't think about it all the time and it seems to just take care of itself.

If you're having trouble trying to manage your money, try the ziplock bags to see if they help. Just divide the cash you have to live on and put it in your bags. Be responsible with it - this is about personal responsibility and change - and after a couple of months you'll probably have settled into a new way of living with your cash. Good luck.


  1. Rhonda Jean, you are such an inspiration to me!! This is a wonderful post for me to take into the weekend, plump full of ideas to adapt for my life, as I travel on my road to simplicity & frugality. I can see now that having my paycheck automatically deposited, while convenient, may not be the best to keep me motivated. Thank you, thank you, thank you!! Carla Jean (aka Grandma Carla in Idaho)

  2. That's a very helpful post, Rhonda.

    We tend to use EFTPOS for groceries and credit card for everything else. Usually that's manageable, but sometimes we overspend. The envelopes you use means that can't happen.

    Regards, Gary

  3. Funnily enough I have started this system myself, only this week, to try and pay extra off my mortgage each month. I even wrote about it on my blog.I am starting with a fortnightly system instead of monthly, but once I get a handle on it I will most likely go to monthly. Thanks for the confirmation that I am doing it right :)

  4. I always used this method when I was a single parent and it was the BEST method of keeping track of everything! :)

  5. Rhonda, you have inspired me to create a budget and for the last month I have been diligently recording and analysing my expenses of living and enacting small readjustments in most areas. I think you wrote "a dollar saved is better than working for a dollar"...it really resonated with me,,,I definitely would rather save a dollar than work for a dollar. Thanks for the inspirations.

  6. I just started doing this today, believe it or not! The only difference is that I used envelopes instead of zipper bags! (I put all the loose change into a pocket in my purse to put in the change jar later)

    My change jar is how I am going to save for special things.

    I have saved 28 dollars over the past 2 weeks. Once I hit 55, we will get a zoo membership!

    Thanks for this inspiring post!


  7. thnaks everyone. I bet you'll surprise yourselves at how much you can save and how much easier this way of organising money is.

    On a more practical note, I have to put that dreaded spam protection on here now. I'm sorry but I've deleted four spams over the past two days and have to take action agaisnt it. : (

  8. I'm inspired. I realize that I am spending too much on unneccessary items and this would be an excellent way to keep me from doing so.

  9. Awesome. I need to start thinking this way. My $5/a day starbucks is killing me. ...and I need to get some housekeeping tips from you too. Love your blog. :)

  10. I used to do the bag (envelope) thing back when things were really stretched. Just started doing it again in the last six months, to finance down the track some big house maintenance (re-clad and re-roof). $$$.

  11. When I was first on benefits after s was arrested & removed, I had cash that went in labelled sections of a thrift box & that worked well. Then the Utilities wanted Direct Debit or more money & the UK government said ALL benefits had to be paid into accounts. I started receiving €200/week disability benefit from the Irish Government in January & I draw out €110/week to spend on my daughter's bus fare (to school in term time, to town with me in holidays), food for us, the ferrets & cats, the rest stays in the bank to pay bills & for the delivered dog, poultry, horse & goat feed. All my egg money goes to the Credit Union for capital animal expenditure (incubators, broody, heat lamps, livestock). I used the money from selling the puppies from my breeding pair to buy my Beddy (from whom I'll breed in a few years time) after my dog, bitch & the pups we kept were stolen. Any money left over from the week's shopping goes into a coin jar/envelope for work on the house. It's much harder with Annon at home for the Summer as I feel guilty that she has no friends here & no chance of a holiday. We have no TV & she is a bookaholic, so I treat her (2nd hand books, yarn for knitting). If she really wants something from our budget, or I need to buy the dog licences (staggered), shoes for her, school uniform, money for exciting meals goes & we have to eat simply. Unfortunately, this week, things were made even more frugal for her as the cheese we bought was completely mouldy within the pack & I couldn't go back into town to change it ~ there is 1 bus a week. I usually buy the cheaper cheese in a clear wrapper, but there was none left, so we got the "good" cheese in proper waxed paper that hid its blue-greenness. Poor Annon had made her pizza dough & shaped & cooked the pizza base, spread tomato puree over it & then she turned the same colour as her cheese on opening the packet. We can't even try to save any from the inside as the shop wants to see the cheese next Tuesday!

  12. I've spent the past weeks writing down what I spend and it's too much! It is hard to manage the needs of a large family but I need to be able to prioritize and plan our spending and set some limits.

    I'm off to make some lists and work out a weekly budget. I've discovered tracking spending isn't going to keep me in line. Thanks for the awesome and timely (for me) post.


  13. Plus ca change... I remember doing this years ago when we still got our fortnightly pay in little yellow envelopes full of bank notes. I think the introduction of pays directly credited to bank accounts, and debit and credit cards, have much to do with people's financial woes these days - one no longer has the sense of real money changing hands.
    If you're still in the wealth accumulation phase of life then another really important envelope is the 10% for investment saving that *never ever* gets spent, but grows into a fund that keeps on paying you when you can't or no longer want to work. Passive income is just the BEST thing. I found a simple little book called The Richest Man in Babylon provided a remarkably inspiring guide to how this works. I gave it to both my kids hoping they would absorb its simple lessons. Both have used the 10% strategy and have been amazed at how quickly even their little contributions from after school jobs have now grown into worthwhile amounts. Just takes time and the miracle of compound interest...

  14. Oh woe, my worst area ever. I am going right now and put categories on ziplocks! I think that will be better for me than envelopes -- I'll be able to SEE what I have in each.

    Rhonda thank you. One more reminder of an area I need to work on.

  15. I love the baggies idea. I've tried envelopes before, but you can't see what's inside. This is a great idea I've never seen anywhere else! It was also cool to see your money. US money is still so boring although it's getting better.

  16. It really is a great way of handing your cash. You can see when you've only got a little bit left and when your bags are empty. Luckily we get to refill the bags every four weeks.

    It's these small steps that will get you on target with your money. Please try it and work hard to make it work for you.

  17. I love your system!! I will sure have to try that one!
    I feel like I could do better than I do..even though we are pretty frugal..the budgeting falls to me..husband is hopeless in that department..but at least he is willing to have me do it..not a control freak for sure.
    Thanks for the inspiration!

  18. fantastic post Rhonda - it reminds me of my Nan..she used the envelope system.. all her money went into various envelopes and she was often seen sorting through them to find the right one to pay a particular bill.

  19. What a great post! Chuck full of ideas for me...I've been wanting to get a budget organized with our house's mortage and all...thanks a lot!

  20. charmingformiceMarch 05, 2010 3:32 am

    This is amazing, thank you so much. I've been reading all through your site (a bit randomly at first, then by specific subjects, now I've calmed down enough to do it from start to finish, in chronological order =). There have been so many helpful posts I've wanted to say thank you for, but this one finally tripped the switch! You're helping me in more ways than I can tell you. The ziplock bags method is just what I needed. I've had a notebook method in the past that was wonderful - but that works better with very tiny amounts of money centrally pooled (in my pocket. they were very small amounts!). This will be brilliant for me now. Thank you so, so much.

  21. Hi Linda,
    I realize thisis a very old post, but I love using the envelope method. I was wondering if you would share what your budget categories are?


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