How many of you are dreading that one piece of mail due to arrive soon? The credit card statement! At some point in our lives, we lean too heavily on easy credit, and it comes back to bite us. This is the first of a few money organization posts to help avoid unnecessary debt.
Many of us are skilled at developing and maintaining a budget; however, what about those expenses that do not fit neatly in a monthly plan? This is where the use of virtual envelopes can streamline a family’s finances. Virtual envelopes are small savings accounts where money can be added and saved throughout the year. I use my local credit union. (Note: Their technical term is just a sub-savings account. I named them virtual envelopes, each labeled for specific use.)
Gifts: How many of you despise the monthly credit card bill that arrives after Christmas? Or the birthday present you figured to pay later? I have a “Gift Fund” virtual envelope set up through my credit union. Every paycheck, a certain amount goes in and when birthdays arrive or Christmas, we have a budget to work from (or at least an amount to start with and add from our monthly budget).
Vacations: How many of you take vacations with only the current paycheck, then the following month dread the credit card bill with all the unexpected purchases? Yes, even vacations require a budget. Setting aside a virtual envelope for the year’s weekend adventures, day trips, or spring break is a useful tool for staying on track or even planning for that once in a lifetime trip (see how we saved over a seven year period for our family trip to Ireland!).
Any other envelopes needed? Do you heat with propane and need to save for winter fill ups? Do you need funds for specific teen activities, camps, driver’s education, etc.? A little planning and organization now will prevent future credit card anxiety. Do you have more needed “envelopes” than money? Pick the two or three that interfere with your budget the most. Even in my own hyper planning, I still have neglected to start an envelope for future vehicles…baby steps. Those of you who usually receive tax refunds in a few weeks, consider starting your family’s fiscal year on a positive note by paying off credit cards and setting up a few virtual envelopes.