I’ve mentioned that our family lives on cash by using the envelope system. I’ll explain our system then you can put your system together in a way that best benefits your family.
My husband’s paycheck is direct deposited every other week into our checking account, which runs statement wise, the 21st through 20th of the month. our monthly budget runs this way too. Since his paychecks are the same each pay period we budget for the whole month, cash a check for the amount needed to fill the envelopes and fill them.
We have a fireproof safe that we keep our envelopes in. I’ve purchased a plastic, medium sized accordion file with 13 pockets. I divided the categories up into the following: auto, house, food, entertainment and recreation, clothing, childcare, medical, property taxes and car tags, insurance and the last one is gifts. In the last two pockets I keep envelopes and index cards. Mike and I get a small amount for blow money each month. There is no envelope for that. It goes straight into our wallets.
In another accordion file, same size but different color, I have categories for charity and church offerings (separate from our tithes), retirement, college savings and we each have a pocket for our spending money and finally a bank pocket. If we write a check we take the money out of the corresponding envelope and put in the bank envelope for deposit.
Within each category there are several envelopes. For example house includes electric, water and maintenance. The phone bill and Internet are taken straight out of the bank by the company. Auto includes gas and oil, maintenance and AAA. Entertainment and recreation has vacation, books, activities, hobbies, magazines and the local newspaper. All except the vacation envelope are filled on an as needed basis. The vacation envelope is filled every month.
As I fill each envelope I label the outside to identify it. I then date the index card and put the amount of money that is in the envelope on that day. This helps me in two ways. I can pull it quickly to see how much is in it. Then the next month when I’m half way through filling envelopes and I have to stop to break up an argument (which happens every month at the exact time I fill envelopes) I can look at the amount already in there and figure out if I’ve filled it already. I try to check the category off as I fill it but it doesn’t always happen that way.
I carry the Dave Ramsey Deluxe Envelope System for my wallet. They come in several colors and styles. My envelopes in my wallet are food, gas, gifts, blow money, church and miscellaneous. I keep $20 in the food envelope at all times. My blow money is always in there as long as it last. When I go shopping I put more money in food and gifts. If I’m buying items for the preschool/children’s department at a place the church doesn’t have an account I take cash to pay for those items. Miscellaneous can carry anything else. I write the date on the misc. envelope, where it is for and the amount of money in the envelope. When I need gas of course I fill that one too.
When the cash runs out in my wallet it is time to go home. If we run out at home its time to eat what is in the pantry and stay home.
If you have a monthly budget the envelope system is a great tool for helping you stick to your budget. It’s not hard to set up or follow. You just have to be willing. If you have any questions or I need to clarify anything let me know. Have a great weekend and keep budgeting.