Imzadi
We used to do the same thing, see the balance in our checking account and think we could spend it without thinking. After fooling around with a few different methods, this is the one that works the best for us. For a little backround, I'll explain how I came up with our budget first.
First, I made a list of all expenses that I knew would come in each month (mortgage, utilities, phones, insurance, car payments, kids lessons, etc.) and added them. I estimated when needed and figured in a little extra on some things that are prone to increase within the year. This total, I multiplied by 12.
Next, I added up all the expenses that occur only a few times a year- license and registration renewals for the car, sewer bills, school fees- anything that you know pops up, but not on a monthly basis.
I added the second total to the first one that was multiplied by 12 to come up with a yearly amount that we NEED just for HOUSEHOLD BILLS. We get paid bi-weekly, so I divided this yearly amount by 26. That is the amount that must come out of each check for the HOUSEHOLD BILLS.
Next, I estimated how much we would need each *year* for other important expenses- Doctor, Rx and Vet bills is the main thing for us. I divided this estimate by 26, also and that amount is what we put aside each paycheck just for MEDICAL.
Now, here is the part that is my equivalent to the envelope system.
Instead of using the regular checkbook register, I bought a 4 column accounting book at an office store. The first column is for the HOUSEHOLD. I wrote the amount needed for these bills at the top, and that is what gets put into this column each check.
The second column is for MEDICAL. I do the same as above and put the needed amount in that column each payday.
Anything left over goes into the third column and the fourth is the total.
It really isn't confusing. For example- You need $1000 for house bills, $200 for Medical. If your check is $1500, $1000 goes in the first, $200 in the second and the remaining $300 in the 3rd. You add the total $1500 on the 4th line.
That 3rd line is the important one!!! That is the leftover money for SPENDING. Out of this, you can take cash out for groceries or put aside money for vacations. This is where we get money for new clothes or haircuts or a dinner out. Once you know that your important bills are covered, the rest is up to you to use as you want/need.
I was never disciplined until I started using this method. Now I know when that column is almost to 0, that's all there is to spend. This is the money I can take from and put into savings for Christmas or Vacation or whatever other special thing that we might want it for.
The checking account balance looks impressive, but I know we can't just go spending it like we used to. The GREAT part is, the money is there when we need it- no struggling to figure out which bill to pay first and which one to send late. The money put aside for medical gives me peace of mind. If one of the kids gets sick, we don't have to put off paying another bill in order to pay for an expensive prescription. When the dog needs her shots and meds, the money is there. That really helps keep me focused and motivated to not dip into those funds.
I think of that money as already spent- those bills will come in no matter what.
The only other thing that helps keep me organized with our bills is a calendar. I usually buy one at the dollar store (if the Vets don't send me a free one) and as the bills come in, I write the name and amount on the day it is due. Every payday, I can look at a glance and know which bills need to be paid. It also helps at the end of the year when you need to look at your numbers and possibly readjust the amount put in each column because of an increase in a particular bill or two.
Sorry this is so long- I hope this helps someone as much as it has helped me.
