How to better manage your budget? A crucial question in this back-to-school season still marked by high inflation. What to do when the end of the month starts on the 5th, you are overdrawn and bank charges are piling up? How to avoid the spiral of over-indebtedness? What are the simple and effective methods for making a budget? What is the value of the envelope method for better managing your personal finances? What are the good reflexes to adopt to avoid unnecessary spending when your bank account is in the red? We will also ask ourselves how to improve the financial education of the French.
Are the French under-informed?
According to an OECD study on financial culture, adults in our country are lagging far behind in this area. And according to the Banque de France, more than 2 out of 5 French people believe they do not have sufficiently reliable information to manage their budget effectively.
Pascale Micoleau-Marcel is less pessimistic, and for her, the French are average in Europe. But for her, we are not used to making a budget. For Pauline Dujardin, it is also because there is no financial education in France and because money is taboo. For Alexandra (pseudonym), the relationship with money is very much linked to our childhood. “There are people who were deprived or who did not receive financial education in their childhood. So as they grew up, they confronted their finances by themselves and made mistakes that potentially would not have been made if they had had financial education.”
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List income and expenses
Each individual or family has their own issues. We can’t therefore give general advice that works for everyone. However, if you want to start, Alexandra explains what to do: “It’s very simple. We’re going to write down our income and list all our expenses. And we’re not going to list your expenses roughly, you really have to list them based on, for example, your bank statement. It’s our best friend in this situation, since it’s where everything is listed, so we don’t forget anything and don’t have an unbalanced budget. So we’re going to list all our expenses and we’re going to make an assessment. Do I have more expenses than income or do I have more income than expenses? So that will already allow us to gauge where we are. And then with what remains, we will be able to determine everything that will be savings, variable expenses and then the leisure budget. Because the leisure budget must not be left behind, it is an integral part of a budget because otherwise if we do not have leisure we are frustrated.” The budget is broken down in a somewhat crude way. Fixed costs, variable costs, savings, leisure, debts.
One way to get a sense of all these expenses is to take a close look at your bank statement. And among the solutions to give yourself some breathing room when your budget is tight, you can:Peel all monthly payments. Monthly payments relating to the insurance contract, health insurance, real estate loans and insurance, bank charges, energy contract, subscription to a telephone operator, streaming services, etc.
And for Pascale Nicolo Marcel, you have to know how to anticipate, try to build up savings, based on your budget: “If you want to have 100,000 euros for your retirement at 65, based on a 3% return, you will invest… 170 euros per month if you start at 35, 310 if you start at 45, and 720 if you start at 55.”
Some techniques for sticking to your budget
To avoid impulse purchases, you can first ask yourself questions before buying: “Is this really essential to my daily life? Do I really need it? Can it wait? And don’t I already have the same thing at home?”
But finances are not extensible, and sometimes you have to go and ask for help. You can renegotiate certain contracts, you may potentially be entitled to assistance that you would not have thought of. It is also possible to contact public services, social workers, social and family economics advisors and other social workers whose budget management is part of their job. And you may potentially be entitled to assistance that you would not have thought of. You have to check that you have access to all your rights.
Associations can also be useful for getting things back on track. There may be some very simple things, such as changing the dates of direct debits, in cases of debt or over-indebtedness, which can help to give a little breathing space.
What is the envelope method?
At the beginning of the month, if you have your salary coming in, or your pension, or your allowances, you divide it into different envelopes (shopping, leisure, health, etc.) and you draw on it gradually until the resources are exhausted. So you withdraw money, or you put it in virtual envelopes, which is now offered by neobanks, and you divide your budget into the different envelopes. And you use the envelope only for the defense item concerned.
For Pascale Micoleau-Marcel: “All methods are good, as long as they raise awareness of a certain number of issues, etc. Personally, I think that banking is progress, it’s a safe, that’s where you keep your money and normally it’s safer at the bank than in an envelope that you might lose, that might be stolen… there’s this little risk.”
Guests to discuss daily budget management:
– Alexandra (@parlonsbudget) is an expert in personal finance. She has worked in bancassurance for 15 years and more specifically in customer relations. She runs the Instagram account “parlonsbudget” on which she shares tips for regaining control of your finances. She has also developed three offers to help people learn how to manage their budget.
Livres : Know how to manage your budget (To get the most out of it) (Larousse editions, September 2023), My budget planner: with the envelope method (Larousse editions, June 2024)
– Pascale Micoleau-Marcel is the general delegate of the IEFP, a general interest association to encourage and promote the financial culture of the French.
Livres : Money Management for Dummies (First editions, April 2013), and Personal Finance For Dummies (First editions, April 2009)
– Pauline Dujardin is a lawyer for the Crésus Federation. She also provides support to people who are experiencing budgetary difficulties.
Chronicle The French user guide Jean- Laurent Cassely
