We’ve been talking about budgets for a while now. So far in our Build a Better Budget series, we’ve talked a little bit about why we even bother creating a budget, about how the budget is more of a seat belt than a shackle, about the budget being a great communication tool, and about the nuts & bolts of budgeting. I hope that our conversations have gotten you thinking about the possibility of creating your family budget. Be sure to sign up for my free email updates or for my RSS feed so that you don’t miss out on any of the conversation.
One of the ways we’ve made our budget work more smoothly is by budgeting cash for certain items. We keep this cash separated in envelopes by spending category. We started off doing this using Dave Ramsey’s envelope system. It’s a wallet-style system with paper envelopes inside. Every time we get paid, we place the budgeted amount into each envelope. Then, when it’s time to shop, we use the cash from the envelopes. It’s very easy to see exactly how much is left in each category at any given time.
Being a die-hard debit card user, the cash envelopes took some getting used to. I’ve had to be more careful at the grocery store. If I don’t keep track of what’s in my cart, I could end up short on cash at the register! Now that’s motivation to pay attention! My old way of shopping was to get a reasonable amount of groceries and pay with the debit card. However, it seemed like I was always going slightly over our budget. Using envelopes has helped me stay within the budget that we’ve set.
As I’ve been using cash envelopes, I’ve found several things that we can do to make them work for us.
- Fill the envelopes right away.
If I don’t remember to stop by the bank to get the cash on pay day, I tend to put it off for a week. That means that we end up using our debit card, and I have to go back and figure out what should truly be in the envelopes by the start of the next week. It’s not pretty, folks! Now I make it a priority to get the cash on pay day and immediately fill the envelopes. - Limit the envelope categories.
My husband was starting to think that we would have a cash envelope for everything down to dog food! But I was able to limit us to just five categories: Groceries/Personal Care, Clothing, Prescriptions, Gifts, and Miscellaneous. Most of the other items in our budget are paid through our online bill pay system or by check. (Many people keep their gas money in an envelope too. We’ve chosen to keep our gas budget money in our checking account so that we can pay at the pump. It’s too cumbersome to get Emma out of the car, go inside to pay, and then buckle her back in before pumping gas.) - Avoid borrowing among envelopes.
Is the grocery envelope looking a little lean? “Borrowing” from other envelopes is oh-so tempting! But borrowing $20 from the clothing envelope isn’t the answer. That will just cause problems when it’s time to buy clothes. Instead, I’ve found it best for us to re-evaluate each envelope from time to time. Maybe life’s been a little hectic and the grocery budget needs to adjust to meet the demands for a few weeks. - Pace yourself.
It’s very tempting to spend more right after I fill up our envelopes. And why not? They’re full of cash just waiting to be spent! I’m learning to pace myself so that the cash lasts through the two weeks or month that it needs to span. - Budget our goals.
When we were trying to decide how much money to put in our grocery/personal care envelope, we knew that were spending a little over $70 per week on these items. Our goal is to spend $60 or less, but we’re not always there. Right now we’re putting $70 per week in and trying to spend less than that. Once my work schedule calms down a bit, we’ll probably just put our $60 per week goal amount in there.
We used the envelope system for a long time. Now we’re under control and have reached Dave’s goals so discipline ourselves without the envelopes. So far so good. This is great and would go to my son and daughter-in-law who are envelope system devotees.
I love this idea and we use the envelope system… I am fan on facebook. Thanks!
My envelopes are falling apart! AH!
ok… now i’m your follower on google. that makes 5 entries! thanks!
here’s hoping!
likety liked you on fb! check!
ok… i’m now following you on twitter… mwuahahahaha!
twitter username is: timetaltreasure
yes, i’m already a subscriber. woot! another chance entered for the drawing!
=D
I love the Dave Ramsey system of paying down debt. However, I have NOT adopted his envelope method. That being said, I do use envelopes for my coupons. One for each store. They are terribly battered and taped.
Your post has inspired me to to bite the bullet and make use of the envelopes for cash and shopping. It will take discipline on my part. But I’ve already demonstrated I can use an envelope system with my coupons. It shouldn’t be too hard and it will really help us out!
Thanks for your post and chance for this offer!
oh oh i forgot to post it…i got some of my friends to become friends and i linked it with my facebook…now i get updates 2 ways..yeah
i really reallly would love to win this, my now defunctioning binder is gonna have to be replaced…bad!!! shape im telling ya..
i love your page, i am an avid reader, i blog about you on several posts..thanks jennifer, you do a great job
I became a google friend follower.
I’m an email subscriber!
I haven’t used the envelope system yet but it definitely sounds like something I need to do. I’ve always used credit cards for everything so I really haven’t paid much attention to where the money goes, I just know I’m spending more than I should. Now that I am out of work and we have a baby on the way I need to get a plan in place and the envelope system sounds like the right way to go for our family.
I have been trying to find a wallet exactly like the SavvyCents one so that I only need to carry one thing, instead of a wallet and cash envelopes. It looks like it would be perfect!
I’m a gcf follower too. =)
I’ve been using the envelope system unsucessfully. Hopefully this will help!
we just started dave ramsey tmm so this would be awesome. fan on facebook and receive email already. thank you for all your hard work.
Just followed you on Twitter
fb fan-Julie La
follow blog as jelaws5
email subscriber
Quite frankly, I am not organized at all when it comes to budgeting etc.
I am google friend follower too
I “like” u on facebook
I know follow u on twitter!
email subscriber
I have not used the envelope budget system but it sounds like a great idea to me
I do not currently use the envelope system, but my Mom has been after me for years to try it. I really want to try it, maybe if I win this it will make me more motivated. Great website, love it!
I follow you on google!
I am an email subscriber!