Basic Principles
Here are a few rules and guidelines that will help you efficiently manage your budget using 4grosze.
1. Budget only the money you have right now
Although it may be tempting to record and allocate the paycheck you'll receive next week, hold off until that money actually arrives in your account. Otherwise, the values in the envelopes may become unreliable. Why?
In many household budgeting methods, planning begins by writing down the expected income for a given month, then that money is allocated to categories. However, we don't always know exactly how much money we'll receive in a given month. Even with a regular salary, there are minor differences - sometimes you get a bonus, earn something after hours, or find 50 zlotys on the street. And in some professions, income is so irregular that it would be really difficult to estimate how much we'll earn in a given month.
The envelope method, on the other hand, allows us to allocate only the money we have at a given moment. If you have 5000 EUR today, that's all you can put into envelopes. It's worth imagining cash and physical envelopes here - you won't put money into an envelope that you're not holding in your hand.
Thanks to this simple rule, when you look into an envelope and see 400 EUR there, you're certain that those 400 EUR are available right away. Moreover, it solves the problem of estimating irregular payments. You receive money, record it, and allocate it to envelopes. Simple.
Yes, it may happen that today you have less money than you need until the end of the month, but the paycheck on the 15th will solve the problem. Then you need to set priorities, allocate those modest funds to the most urgent and nearest expenses, and on payday you'll add the missing amounts. Exactly as it would be with using cash. At the same time, every day of the month you have a reliable budget you can count on.
2. Give every dollar a job
When planning a budget, we should aim for a situation where the Ready to Assign envelope equals 0 EUR. This means that all our money has been given a specific task before being spent.
When all money is allocated, then when some unplanned expenses arise or we overspend in some category, we must take from another to make everything work. We can't just grab money out of nowhere, because all of it has some function and at most we can give it a new one. This teaches a certain approach and develops a habit that "throwing around" money from some category will impact reducing funds in others. However, if we leave ourselves a certain margin in the Ready to Assign envelope, that money will somehow disappear on its own, and we'll only be filling gaps.
It's worth noting here to also assign a specific task to the money sitting in a savings account. Part of it may be intended for example for Foreign Trip, New Car, Own Apartment, Plot Outside the City. 50,000 EUR in a savings account may seem like a large sum, so spending 1,000 EUR on whims can be considered an insignificant transgression. However, if we take that 1,000 EUR from an envelope designated for something else, it will have a greater impact and we'll think twice about whether it's worth it.
3. Adjust the budget during the month
Some people managing household finances believe in the principle that you should stick rigidly to a budget once set. However, it's the opposite in 4grosze. Don't be afraid to move money between envelopes during the month. Did you spend more in an envelope than you planned? Cover the missing amount from a less important envelope. Did you decide that new tires for the car are more important than a new phone? No problem, transfer money between envelopes. Your washing machine broke and you don't have an emergency fund yet? Well, you need to take a bit from the Vacation envelope and maybe a bit from the New Car envelope.
Budgeting isn't so much about rigid rules, but about conscious planning and adapting to changing conditions.
4. Find the money first
An opportunity has appeared, your neighbor is selling a nice bike in good condition, tested, you've tried it before. Unfortunately, you didn't even plan such an expense in the budget, or you have a small amount. What then? This rule says that first you must find the money - meaning you must collect money from one or several envelopes to gather those few hundred zlotys. You consciously give up other things to take advantage of the opportunity. However, if you reverse the order and first spend the money, and then look for it in the envelopes, it may turn out that, for example, you'll be short 400 EUR for textbooks for your child. Then it may not be such a good deal.
5. Plan for irregular expenses
Some expenses are irregular, appearing only a few times a year, or even less frequently. For example, car insurance - 1200 EUR once a year. You can budget such an amount in a given month, or you can prepare throughout the year and add 100 EUR each month to the Car envelope. Because unused money in a given month carries over to the next, when the insurance payment comes, the required amount will be ready to use.
Another example is the holiday season in December, during which we often spend more than usual, so instead of being surprised, you can start slowly preparing from July by adding small amounts. Likewise, a vacation trip is also an example of an expense worth saving for well in advance.
Experts call this type of envelope a true expense fund and it's a term often described on blogs about finance.
6. Plan future months in advance
If you're just starting your budgeting adventure and don't have sufficient savings yet, this point may be difficult to achieve, but it's worth setting it as a goal. Namely, the money we earn this month, we allocate for the next or following months. So if it's February now and we received our paycheck today, we allocate that money for example in April, provided that money for February and March is reserved in envelopes for those months.
This creates a kind of financial cushion for us and allows us to sleep more peacefully. Imagine there's some crisis and the employer says that money for salaries will be there, but with a month's delay. But because the money is already allocated in envelopes for the coming month and just waiting to be spent, the stress associated with such a situation is less.
7. Budget together
This point seems obvious, but it's worth mentioning anyway. The household budget, as the name suggests, concerns the entire house and its residents. It's a good idea for some envelopes to be dedicated to a specific person, e.g., Wife's Personal, Husband's Personal, envelopes related to hobbies, children's envelopes (they can be shared or separate for each child).
And above all, at least once a month, sit down together and talk about what you want to spend your money on and decide what and how much you're saving for.
8. Educate yourself and experiment
Planning a household budget isn't difficult, but it's not trivial either. It's worth educating yourself a bit and observing how others do it. You can watch videos, read blogs or books. There's plenty of material on this subject, you just need to look a little. I also encourage experimenting and checking for yourself what works or doesn't.