Mr. Free and I started off marriage by doing the envelope system, but somehow went wayward.
And so did our budget.
So we are back to it.
The infamous Dave Ramsey made the envelope system popular (which you can read about here)
But it's really quite simple. And works quite well.
For our household, most of our expenses are done online. Including:
Rent (soon-to-be mortgage)
Insurance
Utilities
Internet
Cell Phone
Netflix
Gym
Those are all fixed expenses that do not fluctuate.
We have those directly deposited out of our checking each month.
Our un-fixed expenses if you will, are what got us into trouble.
I would "budget" $60 for fun money for the month, but I wouldn't really keep track. I'd wind up spending $100+ instead.
This is where the envelopes come in.
For our household, we have envelopes with cash for "Groceries", "Pets", and "Fun Money".
(Our gasoline amount fluctuates as well, but we put that on our credit card and quickly pay it off to earn points).
Mr. Free and I have decided a set amount for each of these expenses, and cash goes into that envelope.
In the beginning I used actual envelopes, but they quickly tore.
I decided to whip out this scrapbook embellishment organizer to do the job. (Any coupon organizer from the $1 store would work)
I made tabs for each of those areas, as well as tabs for "Coupons", "Receipts" and "Stamps".
Having all of these things together has been a lifesaver!
I am no longer scrambling to find a receipt or leaving my coupons at home!
I am not, not, not an organized person by nature. This system is helping us sooo much.
The biggest part of this system is that you decided on the amount of cash for each category, and you only use that cash. Don't dip into other categories. Don't use your debit or credit card for those categories.
Hopefully this shed a little light on how we budget. The Free household has some major life and financial goals in the next 5 years, and we must be diligent in preparing financially for those things.
Readers, do you have any questions or any other budgeting tips to share? Do you currently use an envelope-ish system?
we love our envelopes too but don't use them as faithfully as we should (as in I do sometimes "dip" into one for another category) - we have lots of categories which have been super helpful for those less frequent expenses that always come up and "surprise" you like... haircuts (for me), gifts, oil changes, clothing... those all accumulate month-to-month so that in a few months when it's time for an oil change it's all there, etc.!!! toiletries has been helpful apart from groceries for us so I can really make grocery money only for food
ReplyDeleteGood thoughts Laura. Currently our envelopes are 'broad'. I keep all household things together (food, toiletries, cleaning supplies, pet food) since we buy a lot of that at Costco and Target...I figured it would look odd buying them all seperate using seperate cash from different envelopes. : ) I'm glad its worked for you guys!
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