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Make The Most of Your Salary by Utilizing Savings Accounts

The envelope system. You may have heard of this budgeting technique. It heavily involves cash and, you guessed it, envelopes. In case you’re unfamiliar, here’s a brief synopsis of how the “envelope system” works. First, think of where you spend your money each month, and create categories that each of your spending habits could fall into. This encompasses everything from your mortgage, groceries, and gas all the way to your fun money. Once you have those categories, create an envelope for each one. At the beginning of the month, while you are mapping out what you plan to spend, allot each envelope a specific amount of cash. Throughout the month, if you plan to spend in a certain category, you are only to use the cash in that specific envelope. Once the cash is gone, you’re done for the month. While this method can render a successful outcome, there are a few things to consider before trying out this budgeting approach for yourself.

Consider your cash vs. card usage. While strictly spending with only cash to develop a disciplined budgeting routine is great in theory, this method can be a challenge for those of us who utilize Amazon for necessities or buy our weekly groceries from delivery apps that require payment through a card. Therefore, strategizing your budget through spending solely cash can be an inconvenience as our technology and the way we pay for things is gravitating more toward card usage. If you find yourself swiping your card or buying a hefty amount of items through online services, you may want to reconsider the envelope system.

Additionally, consider the benefit, or financial gain, that comes with utilizing a cash only budgeting method. While you may have a tangible visualization of where exactly your money is going, you are not earning any interest by leaving your cash in envelopes. We work hard for our money, so it only makes sense that we are doing the most that we can to make it count. As an alternative to the envelope method, try utilizing savings accounts to hold your money while also earning interest. Plus, you often have the option to set up an automatic transfer immediately after you receive your paycheck. In this case, those dollars are out of sight and out of mind, which can make it more tolerable to save for a bigger purchase. For example, if you have plans to travel abroad or are saving up for a car, setting up an automatic transfer to your savings account will eliminate the temptation to spend that money. It will be out of your checking account before you even realize it was ever there.

If you are considering a new tactic for budgeting your income, look to Orlando Credit Union to utilize our checking and savings accounts. All of our credit union’s savings accounts offer competitive dividend rates, unlimited deposits, unlimited withdrawals at an ATM or in-person, and more. For more information, head to the ‘Checking & Savings’ tab on Orlando Credit Union’s website.