Manage Your Money Properly

This is the fifth post in the Money Girl’s Beginners Guide to Becoming Rich. To read all posts in order, start with Change your Money Mindset then continue reading the rest of the series on this page.

Managing money doesn’t restrict freedom — it creates freedom. That’s probably not the first time you’ve heard this. If you want to create financial abundance, you’ve got to start managing your money.

Now that you’ve created your very own budget, it’s time to put that budget into work with a money management system. It sounds technical and complicated, but it’s really not! Basically, this is a practical action plan so you know exactly what you’ve already spent, and what you have left to spend. Otherwise, you could easily go over budget.

Anyways, let’s talk more about exactly what a money management system does, and how to set one up! Here are a few money management systems you can use to track your spending.

1. Cash Envelope System
Dave Ramsey, an American financial author, recommends that the best way to track budget amounts is with the cash envelope system. Basically, you divide your spending into categories, you create an envelope for each category: food, clothing, entertainment, etc. No need to be fancy; a plain white envelope with the category written on the front will do. Then, you will fill each envelope with the money that you’ve allotted to that particular category. Using the money in the envelopes, you pay for your purchased out of the appropriate envelopes – using the food envelope for food purchases, and the clothing envelope for clothing purchases. Once you’ve spent all the money in a given envelope, you’re done spending for that category. When it’s gone, it’s gone.

If you have any money left in your envelopes at the end of the month, add it to your savings or use it to pay down a debt. At the beginning of budget month, you refill the envelopes and start again. Each month is a new chance to make your budget work for you. If the idea of carrying cash makes you nervous, you can use your debit card and still use the envelope system.

Money Girl Philippines - Cash Envelope System
If you want to get creative with your cash envelopes, why not try out these DIY Cash Envelope Notebook {here}{here}, {here} and {here}. It’s pretty handy and lovely too.


2. Opening Multiple Bank Accounts
Multiple accounts is an updated version of the envelope system. Having all of your money in one account can create confusion about what money is allocated for what purpose. So, using different accounts for your specific financial goals is a great way to organize your money.
The accounts you should have are:

  • Deposit Account: A account where all of the money you earn is deposited. It’s attached to your debit card. This is where you’ll leave your spending money for things like groceries, entertainment, grooming, gas for your car and other “cash expenses”.
  • Bills Account: An account where you transfer your money for bills.
  • Savings Account: An account where you put your emergency savings and money for other savings goals. You can and should have multiple savings accounts for different things ( ex: emergency fund, car, home, travel etc.)

To make things easier for your, I suggest to set an AUTO-SAVE-UP or AUTOMATE your accounts. Decide how much you want to save every payday or every month and it will automatically be transferred from your ATM-based savings account to your Automatic-Save-Up account.

I would recommend opening your bank accounts at the same bank who has online banking services, because you will be transferring your money between the two accounts, and having them both at the same bank will make transfers super easy. I’ve used BPI for this service.

Money Girl Philippines - Multiple Bank Accounts


3. The 6 Jars Of A Millionaire Money Management

The money jars system is an easy and simple way to manage your money. This easy millionaire money management system involves having at least 6 jars. The idea behind these jars is to burn into your subconscious a millionaire mindset about monthly money management. All you need to do every month is to allocate a certain amount of money for the money management jars. Read more about it {here}.

or you can follow the 8 Jar System of Saving Money as shared by Ms. Miriam Quiambao. Watch this video below.

4. Money Management Apps

There are several free and useful mobile tools for budgeting your money. Here are a few:

  • GoodBudget (formerly EEBA) | Cost: Free | Operating systems: iOS, Android
    This is a great app for people who are ready to start creating a budget based on their cash flow. Use the Envelopes section to divide your monthly budget and understand spending habits in each area of your life. For items that land in your recurring budget, select the time frame as monthly, weekly, semi-monthly, or every two weeks, and then pick a start date.
  • Mvelopes | Cost: Free | Operating systems: iOS, Android
    This app starts with a few simple questions about your financial goals. Mvelopes in no way should replace a financial planner or advisor, but it does guide you through ways to think about money long term. Mvelopes functions similar to GoodBudget with the envelopes system, but asks you to define income and create a budget before filling the spending envelopes. This way you’re thinking realistically about how much you have in your accounts, what your income actually looks like, and what a reasonable budget could look like.
  • Pocket Expense | Cost: Free | Operating system: iOS
    Pocket Expense focuses on tracking your spending, giving you a visual outlook on your spending before creating budgets
  • Expensify | COST: Free | Operating system: iOS, Android & Windows
    This app offers both smartphone and web interfaces. I especially like the SmartScan and Add Expense feature. “SmartScan” lets you photograph, categorize, and tag receipts. You can also enter the merchant name, total amount spent, and date for each expense. This is great for anyone who wants to save receipts but doesn’t want to hang on to a paper copy. If you prefer manual input, “Add Expense” offers the categorizing options. You can also note if the expense is billable and/or reimbursable by the flip of a few switches.

Now, which system helps you stay under budget?

{Go to the next step: I Want to Get Rid of Debt!}

3 thoughts on “Manage Your Money Properly

  1. Great post! I myself began learning about budgeting from Dave Ramsey’s Total Money Makeover Book.

    There’s a few budgeting app that’s missing and in my opinion, should be included:

    * YNAB (You Need a Budget) – Paid
    * (YNAB4 rip off) – Freemium

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