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How the 'envelope system' helps this cash-strapped mom save more and spend less

JeanMarie Rinaldi's 2021 financial goal is to track spending and build a cushy savings account to last through the year.
tracking your spending
To get on track, Rinaldi decided to record her spending for two weeks to carefully monitor where every dollar was going. Katty Huertas/TODAY illustration / Getty Images
/ Source: TODAY

JeanMarie Rinaldi, 37, is stressed. A fifth grade public school teacher based in East Brunswick, New Jersey, and a married mother of three kids all under 5 years old, Rinaldi has been overwhelmed during the COVID-19 health crisis. When the pandemic swept through the country in March last year, Rinaldi's school and her kids’ daycare center temporarily closed. On top of the stresses related to working from home while looking after her kids, she knew her finances were not quite where she wanted them to be by the end of 2020.

To get on track, Rinaldi decided to record her spending for two weeks to carefully monitor where every dollar was going. Earlier this month, she sat down with NBC News Senior Business correspondent and MSNBC anchor Stephanie Ruhle to find out how she could improve her wealth health. To help the mother of three cut back on unnecessary spending, Ruhle advised Rinaldi to keep tracking her spending, go on a cash diet and cut back on any recurring expenses.

JeanMarie Rinaldi and her family
JeanMarie Rinaldi and her familyCourtesy of JeanMarie Rinaldi

As a teacher, Rinaldi said she gets anxious about saving enough money to last through the summer, when she doesn’t get a paycheck. A part-time cheerleading coach who also does consulting on the side, she said she wants to reduce the number of side hustles she depends on to stretch her savings, which ultimately means making a better budget.

“I feel like, sometimes, by the end of the summer, I get anxious for me to start getting paychecks again because I feel like ‘Oh my God, I don't have any more money in my savings. I used it all summer,’” she told TODAY.

She also wants to be able to take her kids on playdates to museums and amusement parks in the summer without “breaking the bank.”

JeanMarie's monthly income and expenses

With a $3,100 mortgage payment, $3,590 worth of groceries, utilities and other monthly expenses (including bills and car payments), and $4,850 of credit card debt, Rinaldi initially thought she didn’t have a lot of room to save.

Aside from her mortgage, her biggest recurring expense is daycare, which comes out to almost $2,800 a month. While she can’t cut back on childcare just yet, during the tracking exercise, she realized that when her son starts kindergarten next year, she can start contributing some of that money to a savings account.

Download the TODAY All Day Spending Tracker to keep tabs on all expenses.
Download the TODAY All Day Spending Tracker to keep tabs on all expenses.TODAY

Want to cut identify unnecessary expenses and curb excess spending? Download the TODAY All Day Daily Spending Tracker here and follow Rinaldi's action plan.

4-step savings plan

1. Track spending in your phone

Using the notes application on her phone, Rinaldi now tracks every purchase she makes, no matter how small.

2. Start an inventory of what you need

After Rinaldi tracked her spending for two weeks, she had a much clearer picture of how she was spending her money — and how she could spend it more wisely. For example, after going through her kids’ closets, she realized she was spending too much on clothes for her daughters, but not enough for her son. To spend her money more wisely, she has begun making lists of what she needs before she goes shopping. Now, before she goes clothes shopping for her kids, she makes a list of what’s in their closets. She also makes an inventory of what’s in her fridge before she goes grocery shopping.

3. Try out a cash diet

Following Ruhle’s advice, Rinaldi went on a “cash diet.” Before she shops, she takes a specific sum of cash out of the ATM and limits herself to that amount. For example, when she and her husband went grocery shopping recently, they brought $200 cash. Paying with cash forced them to calculate the amount of items they were buying, she said. As a result, they spent $35 less than they typically spend on groceries.

4. Adopt the envelope system

While Rinaldi’s ultimate goal was to save money and spend less frivolously, she still wanted to treat herself to what she enjoys. When she has extra cash, including bonuses from work, she stashes it away in envelopes for a rainy day. On each envelope, she writes down what the money inside is for, like getting her nails done, hiring a professional house cleaner (something that saves her time and stress) or going out to lunch with friends. Since the money is cash, it prevents her from overspending.

Take control of your spending by tracking all monthly expenses.
Take control of your spending by tracking all monthly expenses.TODAY

1 month later: On track to save $200 more a month

In the beginning of the exercise, Rinaldi said she felt “a little embarrassed, a little anxious” about tracking her spending.

“And then at the end of the experience, I had like this hope, this kind of like newfound look on how I was going to save some money, and how I was going to change some of my habits,” she said.

Before she started tracking her spending, Rinaldi said she used to stress out about getting her paycheck since she didn’t know how she was going to spend it. After just two weeks, however, she said she’s excited to get her paycheck and estimates that she’ll be able to save at least an additional $200 a month thanks to these simple steps.

Said Rinaldi about her financial future, “I have a more positive outlook on it."