Starting the Envelope System

[suzieQ36]

We started the envelope system 2 years ago and it has change the way we spend and save drastically. It is definitely something you tweak over time. How we work it is - I get out a certain amount of cash every week. We have 5 envelopes: clothing, car repairs, household (small fix it stuff), date night & gifts. The rest of the cash for that week is used for groceries/other/entertainment & eating out. I pay all of my bills out of checking on the same day and then transfer money to savings. We leave some money in checking for emergency and for gas (like to pay at the pump w/ debit card).
Sometimes we think of something else we need to buy and we start an envelope to save for it.
Good luck to you and let us know how it goes!!! We may learn from something you do!

 

[angierae]

Thanks for the advice, everyone. I'm looking forward to starting this new adventure.

As for gas, one of the reasons I'm switching to cash for gas is that it's 10-12 cents a gallon cheaper if you pay cash around here. I don't buy gas all that often (work is only 7 miles from home) but I figure at 1.00 or so a fill-up, that adds up eventually, and it's a "convienence tax", to me.

I'll probably just run in and give them a $20 and take what that gives me, but I go through gas slowly enough that only getting 1/2 to 3/4 of a tank at a time won't be a huge deal. (I drive a little Cobalt, it's not very thirsty.)

I'll let everyone know how it goes

 

[scndbaswmn]

I tried this many years ago and it didn't last a week. I so like the convenience of the debit card, but that's what gets me into trouble too! I would like to start it again though, and really try to stick to it. A friend of mine used to do this and it really worked for her (not sure if she still does).

 

[tinkermom23]

We've been using the envelope system for over a year. Be prepared to tweek it to your needs! It almost never works out perfectly the first time.

I only have 2 envelopes, one for Entertainment & Eating out and another for Groceries & Stuff. I found having so many separate envelopes were frustrating. When I shop at Target, I don't want to pay for clothes, groceries, and paper products out of separate envelopes. So I combine and it works for us.

We fill the van with gas on payday and I almost never need more gas before next payday so DH keep the gas envelope in his wallet.

I have also bought Scrip Cards at a friends school for the grocery store and for the gas station. It has worked but is one more step that I don't always want to mess with.

 

[Mickey1Fan]

I do not use envelopes but I use Gail Vaz-Oxlades budget. I use my daytimer and write down my spending for each day and on Thursday evening (payday is every second Friday) I summarize each category on an excel spreadsheet to make sure I am on track.

http://gailvazoxlade.com/resources.html

 

[angierae]

I do not use envelopes but I use Gail Vaz-Oxlades budget. I use my daytimer and write down my spending for each day and on Thursday evening (payday is every second Friday) I summarize each category on an excel spreadsheet to make sure I am on track.

http://gailvazoxlade.com/resources.html

Her budget calculator is exactly where I started. (And then for the next couple of months a few numbers are at 80% while I rebuild what I had to take out of savings for some car repairs.) It was a great resource!

 

[Mickey1Fan]

angierae, as you already know Gail has great resources. I've been using her interactive budget for about a year and I like it a lot. I like the recommended amounts that should be spent in each area and trying to get within them.

Every four weeks I plan my budget and from the sites worksheet I create the excel spreadsheet for keepiong track.

Gail Vaz Oxlade is my hero

 

[Taja]

I've developed a very precise budget in Excel designed for--me! It has very specific categories (groceries broken into food & beverage, paper goods, cleaning supplies, laundry supplies, etc.--no pets or there would be a category for them!). Vehicle is broken into fuel, repairs & maintenance and license/registration/auto club. You get the idea.

I don't use a debit card. I've had the same negative experience as a few others on this site--although I admit the fault was my own one time! I neglected to register a fairly large purchase! The other times either the bank or the sales system had issues and double-charged by debit card. Bye-bye debit card!

I use the envelope system for a few categories: fuel, services (i.e., hairdresser, postage, shipping, etc.), groceries and dining (which is broken into TS and QS--just like at WDW!). Money is removed from the envelope, receipt is inserted. Most other things are paid by check, so I have a good record.

I set myself up as a company in QuickBooks and enter all receipts and checks into it with appropriate category distributions. It takes a little time, but I know where I'm spending my money and if I can--or want to--cut back in some areas. A spreadsheet works equally well. At the end of the month, I compare my budget to my actual and see what is or isn't working and modify after two or three months when necessary.

I probably will need to adjust the fuel budget before too long. I calculated it at $3.75 per gallon when it was under $3 per gallon. *sigh*

 

[apnep]

Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid.

Thanks,

 

[angierae]

Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid.

Thanks,

I think I'm going to use one of those accordian files for coupons.

 

[Taja]

Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid.

Thanks,

*LOL* -- more at myself than at you!

I use the small envelopes that are a bit larger than personal checks. They fit in my purse.

But you can use anything that works for you. If you have leftover envelopes--or want to make some fancy ones--go for it! It's better if they're all the same size, but I've been known to recycle window envelopes from junk mail!

The accordian file idea is good, too. I just like to be able to transport the entire envelop that I need to the place I am going. I write checks for fixed expenses and occasional wardrobe purchases (usually from catalogs).

I have a seroius weakness for fabric, so the envelope system limits what I can spend at one time. I'm pretty good with everything else, so when I have a bit extra, I'll allow some to trickle into my fabric stash envelope, and deposit the rest into savings.

 

[Mickey1Fan]

I tried the envelopes but instead I just note the categories each time I spend money and add it to my excel every Thursday. I wrote about Gail Vaz Oxlade and her method is jars rather than envelopes. Take the money from the jar when you are going for specific items. You can actually see what is left in each jar.

It works well for teaching children how to budget too.

When my son was 12 or 13 and he worked as an umpire. Before he would buy anything he figured out how many games he had to umpire and that would help him decide if it was worth it. For example, a $40 video game would be four games. He is now married and a home owner and still uses this method. $/hour earned vs cost of the item.

 

[goNDmay9]

There's money going into an envelope for car repairs, and automatic transfers to savings happening for long and short-term savings. So that's taken care of, too. Thanks for the reminder, though!

AWESOME!!! you are all set. please keep us updated on the progress. how exciting!!

 

[angierae]

I just wanted to update after my first week!

I have stayed within my budget! All the "envelopes" that are supposed to still have money in them (car repair savings, etc) still have them, and the extra money in my checking account is STILL THERE.

I spent money faster than I'd wanted to, and not on things that I really wanted to save for. That trip into 7-11 was great and all, but now I'm struggling to come up with the money for the book I'd wanted to buy this month. I really need to think twice about where flexible things like "entertainment" are going.

But I just withdrew my cash for this week and although planning grocery trips down to the penny is time consuming, I'm actually finding it's kind of fun to find the best deals and stuff.

 

[Mickey1Fan]

angierae - way to go

I like working out my budget and finding what I really need and then the best price. I also think about extra things for a couple of days and if I still want it and it fits in the budget they I will purchase it.

I hope you continue to have success and fun in this new journey.

 

[Taja]

I just wanted to update after my first week!

I have stayed within my budget! All the "envelopes" that are supposed to still have money in them (car repair savings, etc) still have them, and the extra money in my checking account is STILL THERE.

I spent money faster than I'd wanted to, and not on things that I really wanted to save for. That trip into 7-11 was great and all, but now I'm struggling to come up with the money for the book I'd wanted to buy this month. I really need to think twice about where flexible things like "entertainment" are going.

But I just withdrew my cash for this week and although planning grocery trips down to the penny is time consuming, I'm actually finding it's kind of fun to find the best deals and stuff.

Good for you!

It takes a few weeks to figure out exactly what categories you need and how broad or specific they can be.

And it can be challenging. Sometimes I really want to buy something, but do the cost/enjoyment analysis and decide against it! *LOL*

It's really nice at the end of the month--or what ever period you decided to use--to deposit the extra funds into savings or tuck them into another category that is not essential.

 

[budafam]

We have to do this. DH's pay just got switched from once a week to every 2 weeks and it's now direct deposit so it's a lot harder to keep track of what's getting paid and what's not.

Our money is very tight since I lost my job a few months back. I make money here and there doing Craigslist & other jobs but it's not enough to where we feel comfortable yet.

I've been finding with the price of gas going up that we tend to go into our savings a bit more than I'd like. It's very hard to stick to it especially when DH likes to have a little extra spending money for himself as well (and just doesn't understand the bill situation)