Keeping track of your money with savings envelopes, budgeting and meal planning
Interview with Budgetfröken
Ann: Hello Budgetfröken and welcome. Thank you for taking the time to talk to me about personal finances. You run a very inspiring and beautiful instagram account and a blog called Budgetfröken. We can follow you and see how you organize your finances and savings in various ways.
Budgetfröken: Thanks! I'm happy to hear that you find my account inspiring!
Ann: You use something called savings envelopes. How do you use them and why are they good?
Budgetfröken: Savings envelopes are, as the name implies, an envelope where you save money. Since I like to visualize my savings, I have chosen to have cash savings in different envelopes. Envelopes that I also color as I fill them with money. Right now I'm saving money for Christmas, birthdays, the next car service, etc. The envelopes have an image for the purpose intended on the front where the goal (sum) is clearly stated.
Let's say I want to save SEK 6000 for Christmas and start saving already in January. Then I'll put 500 SEK in the envelope every month and color part of the Christmas tree to visualize my savings. The benefits are several, partly you see the amount increase, and partly you can touch the money. If you have put the five hundred in the envelope, colored part of the Christmas tree, you are less likely to spend the money on something else.
Ann: Cash is a powerful way to really SEE and FEEL how much you pay compared to using a card. What are your experiences with this? and how does it work in Sweden? do most shops accept cash or how do you go about it there?
Budgetfröken: Just like you say, the benefit of cash is that you can really see and feel the money. A bank or credit card can create the feeling that you have more money than you actually have. If you have SEK 500 in your wallet, you have SEK 500. No more no less.
My experience is that I spend more when I pay with a debit card. I spend even more the times I pay with a credit card. Many people pay their bills and make sure to save well each month and then rely on the rest of the money to cover other expenses such as food, transport, clothing, entertainment etc. It is quite common to use a credit card where you pay the invoice afterwards.
I think that many people have not decided in advance how much they can / should spend, instead they go on a general feeling because you have coverage on your credit card. Then you pay your invoice diligently, but do not realize that you have spent more than what you really wanted to spend. Which can lead you to not saving as much the month after due to a slightly high credit card invoice. The option of a debit card (which lacks credit) may be a better option.
But I mean that even in these circumstances, many people spend more than they actually have available. Say that you pay all your bills, make sure you save and then the rest of the money should cover exactly "the rest". The week before pay, the money on the debit card is spent and you start to "borrow" from yourself. The amount you dutifully transferred to the savings account at the beginning of the month may have to start being taken from as the regular money has run out. So you transfer the money back to the card and continue to spend. The critical observant might point out that the same can happen if you use cash, and of course that can also be the case.
The difference, however, is that no matter how you look at it, using cash lets you see in front of you in a clearer way what you can actually spend. Most grocery stores accept cash and even though cash handling has been reduced drastically under the corona virus, there are still many places that accept cash. I have decided to always pay cash when I buy food. Other categories such as petrol, fun things etc. I pay with my credit card. I have a sum budgeted for each category and keep track of how much I have spent by writing down each purchase. Works like a charm!
Ann: There are many tips on how to best start with a budget. What I am interested in is knowing how to continue using a budget :-) What do you think one can think of or do so that you continue with your budget habit instead of giving up after a month?
Budgetfröken: What a good question! My experience is that many people have not asked themselves the basic questions before starting a budget. You have to think about why you want to make a budget and what is the purpose of your budget. If you make a budget because "everyone else" seems to have one or because you "should" have a budget, I am afraid that you will be stuck pretty soon.
I usually talk about your "why". Why do you want a budget? What do you want achieve with Your budget? For several years I created a budget every now and then and it worked more as a foundation, but I never managed to stick to the amounts. The week before my salary it burst and I started spending money I didn't have. I always thought "I'll fix it with the next paycheck".
The mistake turned out to be that I did not have my "why" clear to me. As soon as I knew why I needed a budget, it started to work. That combined with starting to track my spending. For a couple of months I wrote down all purchases. From the smallest piece of chocolate to larger clothing purchases. I categorized the purchases and got a shock. Yes, a shock! It turned out that I paid huge amounts on food and spent a lot of money on coffee and stuff. I managed to maintain my budget habits by realising how much money I was spending on unnecessary things. That combined with knowing my "why" and a very simple budget template was the concept that worked for me.
Ann: I've seen that you meal plan and it's a really great way to save on food costs! What tips would you give someone who wants to start meal planning? how do they get started?
Budgetfröken: Simple dishes based on few ingredients. Now during the summer months we eat breakfast, lunch, snack and dinner. Only one meal a day is a hot cooked meal. It works great to replace one of daily cooked meals with, for example, cereal or porridge. My meal planning usually uses seasonal products when they are the cheapest. I mix minced meat etc. with lentils or beans. If you have family members who do not like the taste of lentils or beans, you gradually sneak them in.
By knowing in advance what to eat, we avoid panic shopping. Sometimes I choose to start with the store's on sale offerings, easily and often cheaply. A tip for those who want to get started on meal planning is to take a look at what others plan weekly in terms of food and try some new dishes.
Ann: If you had to choose ONE more personal finance tip (which we haven't yet talked about), what would it be?
Budgetfröken: Okay ... We have already talked about a budget, so I cannot choose that. In that case, I would say to not use credit cards and switch to a debit card in combination with cash. No matter how you look at it, with these credit cards, I would say that in the end you will always spend more if you use credit cards than if you use debit cards / cash.
Ann: Thank you so much for your time and your answers!
Budgetfröken: Thank You!
Check out and follow Budgetfröken on instagram and her blog. (in Swedish) There are a lot of interesting info and free budget templates, savings envelopes and saving trackers to download.