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Most people are in the habit of spending more money than they can afford. In fact, people literally finance their lifestyles with credit cards and personal loans, instead of putting aside the money (saving), to do the activities or make the purchases they’re paying for on credit. With some basic planning, about 10 envelopes and an hour or so - you could get control of your finances.

While you won’t need advanced calculus to make the 10 envelope system work for you, you will need to change your spending habits and be prepared to be more disciplined than you’ve probably been in the past. Here are the steps to solving your financial problems with envelopes:

1. Determine an accurate estimate of your take-home monthly income.
2. Write down the main categories of your spending- try to keep it to 10, for example:
   • Rent/Mortgage
   • Food
   • Utilities
   • Car
   • Credit Cards/Loans
   • Savings
   • Charity
   • Entertainment
3. Divide your monthly take-home income to account for each of your spending categories. If you’re mortgage is £950 a month, write that amount down next to the category. Be sure that when you add up each of the amounts you’ve allocated for your categories that it does not equal more than the amount of income you make each month. Adjust the numbers until it works. (You may find your entertainment, savings, and charity numbers are much lower than you’d like, but as you pay off debt you’ll be able to re-arrange where the money goes).
4. On the face of each of your 10 envelopes, write one of the categories and the dollar amount you’ve designated.
5. When you get paid, you will simply start filling your envelopes with money, based on how much you’ve designated for each category. (If you need to write a check to pay for something, simply deposit the cash and write the check.)
6. When you run out of money in an envelope, you can no longer spend money for that category. This is where you need to have discipline. If you run out of entertainment cash and decide you want to see a movie- you can’t just pull from one of your other envelopes, or put the admission on your credit card.

People who have tried more formalised budgeting techniques and failed often find this system of envelopes to work well for them. The first couple months are typically the most difficult, because you may have set up your categories with the wrong dollar amounts at first - but you can fine tune it as you realise exactly how much you really need in each of the categories.

There are other ways of to help get your finances in order; if you’re finding that all of your outgoings are getting a bit complicated you could consider a consolidation loan, an approach that makes particular sense if you manage to track one down that has a better rate of interest than your existing debt. Loans from Alliance and Leicester and Tesco currently feature towards the top of the best buy tables, offering interest of around 7% APR.