Learn about saving in envelopes, an old trick to survive inflation

The economic situation is not comfortable for many, taking into account the rise in prices and inflation. Therefore, more and more young people are opting for an old and simple method to order and limit your expenses; and avoid falling into debt. It plots the method of savings in envelopes. Do you know what it is and how to do it?

MORE INFORMATION: What is the importance of an efficient saving culture?

Young American consumers prefer to get organized before accumulating uncontrolled debts on credit cards, which do not go hand in hand with low wages and an increase in the cost of living. And it is that today, even the products of the basic basket have increased their prices, which is why the budget is unbalanced. If you want to know more about this saving method, continue reading.

WHAT IS THE ENVELOPE SAVINGS METHOD?

The envelope savings method is one of the best-known financial tricks for people to save. It is a very old technique, already used by our grandparents, because before it was collected in cash and the money had to be distributed.

To do this, you must first take account of the expenses of the month and then distribute the money in several envelopes, according to the category of expense. This way you force yourself to think at the beginning of the month how much money you are going to need for each section, carrying out a thorough planning and avoiding wasting money.

HOW TO SAVE WITH THE ENVELOPE METHOD?

The personal finance expert Alejandra Rodríguez explained to the media businessinside that to save on envelopes is simple and explains how to do it:

• Every time you want money for food, you take it out of the supermarket envelope, if you need to go for medicine, you get it from the pharmacy envelope, when you want to go out with your friends, you open the leisure envelope.
• It is important to create an “other expenses” envelope, which you should use in an emergency. Example, if the money runs out in one of the aforementioned.
• Golden rule: never change money from one envelope to another, as you would be breaking the rules of the method and saving would become more complicated. For that you have the “other expenses” envelope.

WHAT SHOULD I TAKE INTO ACCOUNT IF I WANT TO SAVE ON ENVELOPES?

If you want to get started with envelope savings, here are some factors to consider, finance specialist Diahann Lassus told CNBC:

• Start small: Personal finance experts recommend that people who start accumulating cash should start with large and important fixed expenses such as mortgage, water, electricity, etc. It is a way to be constant.
• Security: It may seem satisfying to have wallets full of money, but you should also be careful not to leave large amounts of cash at home.
• Save: To protect your cash and take advantage of bank interest rates, some people deposit their savings every time they accumulate between US$500 and US$1,000.
• Requires work: saving on envelopes takes more time than paying with a debit or credit card. In some cases, paying in cash can bring with it the collection of commissions. Also, you must have time to create the budget, go to the bank to withdraw the money and assemble the envelopes at home.