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It feels like your parents were just cooing over you yesterday and poof, you are now a pre-teen and young adult! Your needs and wants are evolving and you’re spending much more than expected.

As a young adult, it may be time to engage in financial conversations with your parents or friends. Speak with them about the importance of budgeting. Draw up a list of money categories and let the process begin! You can take steps towards managing money in a responsible. You’ll even reap these benefits well into adulthood.


Furthermore, if you are of spending age, it’s time to learn how to budget. The following article will help empower yourself by learning how to budget. You will be super thankful that you did. Adults that have problems budgeting can learn as well.


Read on to learn about how an envelope budgeting system can be a great tool for you and your family.


What is the Envelope Budgeting System?

The envelope budgeting system is an easy way to separate money into categories. The categories are your budget. When you spend money, it’s taken away from one of the categories. The money that you spend is called your expenses. 

How does the System Work?

At times, it’s challenging to manage our spending.  However, the envelope budgeting system is a super easy way to start this process.  Once you decide on your budget for each category, place the money into the separate envelopes.


1. Budget Categories:  First, think about your pattern of spending. Then, agree on the general categories that apply to you. The categories may vary depending upon your age, interests, location or lifestyle. However, the following budget categories are common for most people: 

⮚     Spend: You need a fixed amount in this category. This money is used for your frequent interests and purchases. Examples may include books, video-games, day trips, makeup, clothes, eating out, or going to movies.

⮚     Save:  Is there anything that your heart is really set on buying but you need to save for it? A used car, great seats at a music concert or a new tablet? Having a “save” envelope is a good start to achieve your goal. 

⮚     Donate/Give: It’s important to give! Whether you’re giving back to your community or donating to an organization, it’s important to contribute to our society. What better way to make sure you donate/give than to have a separate envelope for this purpose. You have the freedom to decide how you would like to share your donations. I’m sure that they will be greatly appreciated.  Not gift is too small. 


2. Set budget amounts: Once the categories have been established, discuss how much you need to set aside for each category. Some of the categories may be a fixed amount (Spend and Give/Donate envelopes for instance) while others may change (Savings, for example). Your goal may be to buy a laptop. After achieving this goal, your next goal may be to attend a music concert. The money that you are saving in your “save” envelope depends on your goal and the length of time it takes to reach it. It’s important to remain within the overall budget that you set for the month. 


3. Fill in the envelopes: Once steps 1 and step 2 are completed, fill in each envelope card with the budgeted amount and label them. Keep track of your progress. It’s a great feeling watching your money grow.


What are the advantages of the envelope budgeting system?

1. The system WORKS!  Once you determine your budget categories and set specific amounts, you’re all set to fill your envelopes with cash. When you earn or receive money, divide it according to your “set budgeted amounts” and add that amount to each of your envelopes. Once you use all of your money out of an envelope, begin building your funds again with money that you earn or receive.    


2. Increased awareness of your spending patterns:  The envelope budgeting system is based on using cash. By closely monitoring the amounts of money that you receive and spend, you become much more aware of your spending patterns and your balances.


3. Develops responsibility and discipline: The envelope budgeting system emphasizes spending within your set budget. This disciplined method of money management increases your level of responsibility. This system also increases your chances of meeting your goals.


4. Decreased chances of overspending: When you only use the cash from your envelope budgeting system for purchases, you cannot overspend. In addition, tracking your balances allows you to plan your purchases. What a great way to be in charge of your finances!


5. Emergency expenses: The envelope budgeting system is not for emergencies expenses. However, if you need to use the money in an emergency situation, please feel free to use it.


What happens with online purchases?

Although the envelope budgeting system is based on using cash, there may be times when you also purchase items online. The envelope budgeting system is flexible and adapts to your changing needs. Let’s take a look at the following 2 options:


Option one: If you make regular online transactions (like a subscription to Apple Music), write the budgeted amount that you spend on the “spend” tracking sheet. Every time you pay the subscription, deduct the amount from the overall amount written on the sheet.


Option two - Once you make an online purchase, take out the amount that you spent from your “Spend” envelope. Give that money back to your parent, guardian or trusted adult that made the purchase for you right away. This will allow you to have an up-to-date balance of your account. 


Why choose Junior Wallstreeters’ Budgeting System?

The Junior Wallstreeters’ Budgeting System helps you manage your money! The system comes with a tracking sheet which helps you closely monitor your financial goals. For example, once you set your annual savings goal, break it down into monthly targets on the tracking sheet and watch your money grow. At the end of the year, review/celebrate your progress and/or make plans for improvement, if needed. As a bonus, since the envelopes are also written in Swahili (along with English), Junior Wallstreeters’ Budgeting System also offers you a unique opportunity to practice Swahili, while also being more financially responsible.


This is the right time to start thinking about money management and budgeting. The Junior Wallstreeters’ Budgeting System is one of the simplest money management tools available for youth and young adults. All that’s needed are our envelopes, tracking sheets and a plan.


Ready, Set, Budget!

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