Many people find managing money difficult and that is contributing to the rising credit card debt in the UK.

Do you often find that in the run-up to payday you are skint? 

Or find yourself paying for your food shop with your credit card, knowing that it’s already close to its’ limit?

Or worry that your credit cards are almost maxed out and know that you shouldn’t spend more on them, but still do?

Do you spend money on random stuff, without even thinking about it?

It is such a common situation, but the good news is that there is a really simple way to help you to manage money better.

I think it will help you to:

• make managing money easy
• know how much you can afford to spend
• cut down on frivolous spending
• start paying off credit card debt
• grow your wealth

Once you get it set up, you honestly don’t need to think too much about it.   

It will help you to ensure that all your bills are paid, you will never need to remember when they are due and it truly will help you to feel more in control. 

It’s called the envelope system of budgeting.

To make this work in the simplest way possible you will need to grab a bank statement from last month and work out your income and expenses. You will also need 2 bank accounts.

A bills account

A spending account

If you have a bit more time, you might want to do a full and detailed breakdown of spending and set up a yearly budgeting system which you will find here.  If not, then read on for the quick and simple version.  

Pay all your regular expenses from your bills account and transfer a suitable amount (weekly, fortnightly or monthly) over into your spending account.  You then know exactly how much you have available to spend and know that all your bills are covered.

Once you have identified how much you have available to spend, you should divide this spending money between different categories such as groceries, toiletries, fuel, clothes, etc.  This will let you see how much you are able to spend on each of these areas each week/fortnight/month.

This system works really well with physical envelopes and cash, so if you like using cash, then get some envelopes out and get started. 

However many of us now rarely use cash and wouldn’t want to start.  That’s where Starling bank comes in.  It can help you to set up an envelope system to manage money better in the digital world.

Opening a Starling bank account allows you to do this easily within your account because you are able to create separate "spaces" within your account.

Eg:  Allocate £240 spending money between your spaces.  From the example above we can see:

• Clothes £30
• Family £60
• Fuel £50
• Groceries £100

If you do a food shop costing £85.55, you would remove that £85.55 from the groceries space, leaving you with £14.45 still available to spend on food shopping. 

If you then filled the car with petrol (£50) and bought a birthday present (£15) and a new toaster (£23.99), you would remove them from the relevant spending space. 

At a glance, you can easily see how much you have available in each "space" to spend on each area. 

Using this system makes it easier to control spending and to stick to a budget (a word that I really don't like because it feels restrictive and boring!) or spending plan (my preferred choice, because it feels more empowering and that I am CHOOSING what to spend my money on).