How To Budget Using the Envelope System- By Erin Huffstetler, About.com Guide

1. Create a budget.
   In order for the envelope system to work, you need to know how much money you have coming in and how much money you have going out. Start by creating a budget that reflects your current financial situation.
2. Divide your spending into categories.
   Look over your budget, and divide it into areas of spending: food, gas, clothing, entertainment, etc. Then create an envelope for each category. No need to be fancy; a plain, white envelope with the category written on the front will do.
3. Fill your envelopes
   Fill each envelope with the money that you've allotted to that particular category.
4. Spend until the money is gone.
   Pay for your purchases out of the appropriate envelopes – using the food envelope for food purchases and the clothing envelope for clothing purchases – but only until the money is gone. At that point, all spending in the drained category must cease until the next month.
5. Put any leftover money into savings.
   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.
6. Refill again the next month.
   Refill the envelopes, and start again. Each month is a new shot at making your budget work.

Tips:

1. Tweak your category allocations over the first few months until you arrive at numbers that work for you.
2. If you're not used to paying for your purchases with cash, it may take a few months to adjust to the envelope system. Don't beat yourself up if you run out of money before the month is over. Just try harder to stay on budget the next month.
3. If a monthly envelope system doesn't work for you, try a weekly or bi-weekly envelope system. The goal is to create a system that works for you.
4. Does the idea of carrying cash make you nervous? No problem. You can use your debit card and still use the envelope system. Just subtract each purchase on the back of the appropriate envelope, and stop spending when you get to zero.

What You Need:

• Envelopes
• Pen or pencil
• A copy of your budget

What are Unit Trusts? ________________________________________

Stokvels, mutual funds, equity funds, unit trusts - to thousands of  investors all of these are more or less the same thing. To a certain extent they are quite right. Many individuals cannot accumulate large enough pools of money to give them access to an expensive service or product. In the case of Stokvels - the original term was probably "stock fairs" - the individual then uses the pooled money to buy goods in bulk at a lower price, or to negotiate better returns or loans at low rate of interest.

Unit trusts work in very much the same way. They obtain something that is almost impossible for individuals - blue chip shares. Shares are the main commodity traded by the Johannesburg Stock Exchange. Some types of shares - known as blue chip shares - are in demand and are therefore expensive. Examples of blue chips are Driefontein gold mines, Suncrush and South African Breweries. Daily newspapers publish the prices of these shares and many others on their financial pages.

The high prices of some shares have been as effective as a Yale lock and an iron bar in prohibiting investors from purchasing them. A golden key to unlocking these riches is now in the hands of even the most modest investor. That key - unit trusts - is available to everybody.

Unit trusts are not insurance products. Many insurance companies who market life assurance, retirement annuities and other related products, also act as management companies for unit trusts. Along with life assurance, retirement annuities, etc., unit trusts fulfill a very important role in the individual's portfolio.

How do they work?         

Unit trusts are the pooled resources of thousands of investors who have entrusted their money to a management company.

The management company buys shares on the Johannesburg Stock Exchange on behalf of the investors. The trust does not give the shares to the investor, but combines them in a portfolio. The management then divides the portfolio into many equal "units." The investor receives a certain number of units for the money he has entrusted to the company that manages the unit trust.

The Johannesburg Stock Exchange represents the main sectors of the economy. These are gold, other mining, mining houses and industry. The unit trusts represent each of these four sectors in their units. A fifth sector - liquid assets or cash - completes the contents of a unit trust portfolio.

Anyone can buy units by investing a single lump sum or by investing on a regular monthly basis. In most equity or share investments there is always an element of risk. Fluctuations of share prices on the JSE cause this risk and are also responsible for their increase or decrease in value.

However, the fluctuations in unit trusts are often not so severe. Shares that show a stable or better performance cushion the drop in price of other shares. This is especially the case with the general unit trusts, where risks are lower than in the specialist trusts because the general unit trusts gain exposure to more sectors.

A barometer of the country's economic health is the Johannesburg Stock Exchange. Share prices generally rise in a healthy economy. In an ailing economy, prices will fall and subsequently so will the price of units in a unit trust. That is the bad news!

Bad news becomes good news

Unit trusts utilize the bad news to create good opportunities for investors. In simple terms, the drop in share prices means that more units can be purchased on behalf of the investor for the same amount of capital.

When the downturn cycles (bear markets) are over, the share prices will be lower. The trusts will be able to purchase more units with the same amount of investors' money. The larger number of units purchased then offer a bigger opportunity for growth in an upturn of the market.

This is also why unit trusts are not usually a short-term investment. They are able take advantage of both the downturns and the upturns. Therefore the reasoning is that, the longer the period of investment, the lower the risk.

What are their advantages?

The most obvious advantage of unit trusts is the direct access investors get to wealth creation and profits of the Johannesburg Stock Exchange. Everyone, regardless of occupation, qualifications, sex or age, can share in this industry that opens the door to every sector of the South African economy.

The beauty of unit trusts is that the investor needs no expert knowledge. The individual doesn't require experience in buying or selling or a knowledge of shares. Teams of professional economic and market analysts will invest on the investor's behalf to ensure the maximum capital and income growth.

With a small regular monthly amount (between R20-R50 depending on the company) or a low single lump sum (between R100-R500 depending on the company), you can share in the biggest and best the economy has to offer investors.

Clearly you don't need to be a millionaire to share in the advantages unit trusts have to offer. Protecting one's buying power has become a major problem, especially in a country with a high inflation rate. Unit trusts are consistently proving their worth by beating inflation over the medium to long term, while giving capital growth.