Work

By Rachel Britz in collaboration with Aaron Britz

Wilbur and Marie Brown are millionaires. Though, standing in a crowded room, it’s unlikely you would be able to pick them out. Wilbur, a working class professional, remained loyal to one company for over 35 years before retiring at the age of 60. Marie remained a life-long stay at home mother. They are your quintessential middle-class family so how did they become millionaires?

Marie points to an age-old money management system involving envelopes as the source to some of their family’s success. “With every paycheck, I took a certain amount of cash and divided it among my designated envelopes. I would then write on the front of the envelope what the cash would be used for. For instance, groceries, gas and spending money had an envelope every month” says Marie. “If we wanted to take a family vacation or if I knew the car would need new tires, I would start another envelope and tuck small amounts of cash away every month” explains Marie.

In a society where we have become reliant on the use of credit and debit cards to pay bills and make purchases it’s no wonder that sticking to a budget can become a daunting task. The ability to tally day-to-day purchases from your credit or debit card in an effort to remain faithful to your budget requires constant diligence. This can often be a difficult chore when working, running kids here and there, and managing an already full and demanding life.

Where do I begin?

Financial planners will admit that a common question they receive is “Where do I begin?” It’s hard to know where to start when in the long run we want to accomplish so many financial goals like paying off debt, contributing to retirement funds, building up our savings accounts, giving and saving for a child’s college fund. All rank in importance, but what comes first?

Determine a budget

According to experts, the first step is to determine a budget. The beauty in creating a budget is that it tells the story of where you are today and lays the foundation for making important financial decisions tomorrow. One of the best, free ways to create a budget and manage your money on-line is through www.mint.com. Another great home budgeting system is from www.mvelopes.com. This award-winning, spending management program helps you look to the future and manage your spending accordingly. Through mvelopes.com you can create a personalized budget, track spending and always know exactly how much you have left to spend. The only downfall is that mvelopes.com requires a minimal annual fee to use their program, however, the convenience and accountability factor might be worth every penny.

Pushing the envelope

Once your budget is completed, the envelope system provides a timeless approach to financial accountability. Taking the budgeted amount of cash and putting them into the determined envelopes provides a tangible way to see how much money you have available to spend. When the cash is gone, it’s gone. It helps when choosing between that really great pair of shoes on sale or dinner with friends on Friday night. You’ll find that you will be more likely to think twice about purchases when considering how much cash is available in the envelope. It takes determined self-control but, within a few short months, after becoming accustomed to your new way of spending, the opportunity to then expand on other financial goals becomes easier to tackle.

Although the Brown family’s financial success does not hinge on utilizing the traditional envelope system alone, it’s likely that this framework of diligent spending was just the foundation they needed to build upon the rest of their long-term financial goals. Financial freedom doesn’t always come from having a large income; instead it comes from managing the money you earn with intent.