Teaching financial literacy in Africa through an Envelope Game: a tool for budgeting and discipline

One of the biggest challenges in Africa is managing money. Most of the participants that go through our business training have never made a personal budget. They have never been taught that it’s important. There is no example in their culture as most of the people live day by day and don’t plan ahead. Creating a personal budget is the first step and it’s not so difficult, but keeping a budget is hard.

To help, we created an Envelope game. This is how it goes:

Participants sit together in groups and receive several envelopes with categories of expenses written on it. For example, one envelope reads: RENT. Others: GROCERIES, SAVINGS, EMERGENCIES, GIVING. They receive an equivalent of one months wage in the local currency in fake money bills and they need to divide up the salary that they have received in the different envelopes.

From there we give them several challenges to solve:

  • The month goes by and you need to buy grocery, but you have run out of cash. What do you do?
  • An emergency happens, your child got sick. What do you do?
  • You need to pay school fees in two weeks, what do you do?
  • What do you do when there are no medical bills this month. Do you take out the money for medical and use it for something else?

The key take-aways of this game are:

  • Spend only what you have
  • Be disciplined
  • Learn to save

Advantages of managing money with an envelope system:

  • It enforces discipline.
  • It holds you accountable.
  • It makes it pretty hard to overspend.

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