Monday, February 11, 2013

Budgeting 101: "My" Envelope System

Want to read about the rest of the Budgeting 101 Series? Find it: HERE.

Budgeting 101: Class 1
“My” Envelope System
(Download Printable Envelopes at the Bottom to try yourself.)

Have you ever heard of Dave Ramsey?  
He gives excellent finical advice. 
 (Want to know more look: here)

After listening to him and going through his budgeting systems I really liked his philosophy and his strategies.  
BUTIt doesn’t completely work for me.  
I know that should be a red flag.  
But, honestly I had to be realistic about how I manage my budget,
because if it is too hard to keep up on, then I won't follow through.

My Issues Were:
-Paying Cash for everything
-Different Envelope of Cash for each category.
-Charting out at the beginning of the month our spending…and accounting for each dollar.
...but everything else I loved!

NOW I Do think these ideas are great.  And if you can, then do them!

For me, it was too much stress, with kids in the shopping cart, trying to get the exact amount of cash from one envelope for the food items, then getting some out of the next envelope for household items, and some from another for baby items, …etc.  It was overwhelming and I rarely had the exact cash in each envelope and it was more work trying to count and keep track, that in the end…I PULLED OUT THE DEBIT CARD.  
(I KNOW, exactly what you aren’t supposed to do.)

So here is how I “altered” it to fit my needs.
(To see the breakdown of my expenses, look at my Monthly Budget found: here).

ENVELOPE 1: ($200)
Household Items 
(Including: Hygiene, baby needs, etc)

ENVELOPE 2: ($100)
Food Storage  
(Long Term Items, Basic Staples & Bulk Paper Products)

This includes Eating Out, Dates, Babysitting, and Entertainment

Miscellaneous- Anything Else
Husband- Anything he chooses to spend
Wife- Anything I choose to spend
Kids- Clothes, Rewards, School Needs, etc.

My envelopes DON’T include cash.  
Instead my envelopes include a list of what I spend & 
inside the envelopes I keep receipts.

How I use the Envelopes:
On the front of each envelope, is a list: 

1. The Budget Amount  and  2. A Running Total. 

STEP 1: When I get home from the store I write the amount spent on the list, then put the receipt into the envelope.  If the receipt happens to have items in multiple categories, then I put the receipt in whichever envelope that is has more items of that category.  (For example, let's say I buy a toy at Walmart, this would go under "Kids", but I just write down the Toy and its Price on the Envelope 4, but the receipt is kept in Envelope 1.) 

STEP 2: Throughout the month I keep a list of what is spent, this helps me see how much I have left and to ration our spending. (When the designated money from an area is's gone.  IF I really need something, I can spend from  my MISCELLANEOUS budget.)

STEP 3: Then at the end of the month I total everything up. Take the envelope with its receipts and file it away, in our receipts box. Everything is kept easily organized and takes very little time on my part. (Which means I actually do it, so it works)

I can easily track my spending, see how the budget is going and where our trouble spots are.

What do you do with left over money in each area?  (…if there is any)

Well there are 2 Choices:
1.     Put it into savings and pat your self on the back
2.     Have it Roll over to the next month in the same category.

There are Pro’s & Con’s to both. 
So what I first suggest is pay attention.  Is there an area month after month with money left over?  
Well, then you don’t need to budget so much for that category.

But, there are some areas, like Food Storage that I like my money to roll over.  Some months there are better deals than others and I fluctuate how much I spend.

Also, in some of the more “fun” areas you don’t want to feel like, I have to spend this or I loose it.  In fact, it is a great motivation to teach you to save.  Like entertainment, you can go cheap one month so that you can splurge on an overnight getaway the next month.  Or in my personal budget, I might save up so I can buy a more expensive item.

BUT, if your budget needs to be tighter and it's hard to make ends meet, then don’t roll it over and instead put it towards the basic needs.


 Keep Checking back for more Budgeting 101 posts with more tips and ideas to save money!

Click: HERE for the rest of the Budgeting 101 Series. (It will be continually updated)

And for more on Dave Ramsey Check out Housewife2Hostess, she will walk you through it.


  1. I might switch over to your envelope system. It looks like it is WAY easier if you can stay disciplined.

  2. I see that there are many people who are doing this envelope method in budgeting. It seems effective for most people because they can monitor how much they spend and save monthly. I think that the great thing about it is that you are able to allocate an envelope for each category of your expenses. However, I think if I were to imitate this method, I would simply include food and household needs and other stuff I buy at the convenience stores or supermarket under groceries so that I won’t have to put out a lot of envelopes while I am on the counter.

    Valencia Paz

  3. I’ve tried this envelope system and it really helped me control my overspending because I can track my expenses. I have been doing this for 3 months and I have saved a bit more since then!

    Era Kehoe

  4. Wow! This is a very organized and specific way to budget your money. I do handle my expenses, but I’m not as precise as you. Anyway, there’s no harm in trying. Maybe, if I keep a close eye on my expenses, I’ll be able to save more. Every cent matters especially today.

    -Ermentrude Glass

  5. I love your envelopes...but I tried many times now to download the PDF but just get viruses and unwanted sales requests. Is there anyway to just get the file emailed to me? Or put in a link that doesn't contain all the extra sales stuff? Thank you

  6. What abut BILLS. How do you put those in the envelop system?

  7. I love the system you have created! The time I was most effective in sticking to my budget was when I wrote down every purchase in a little notebook in its category and stapled the receipt to the back of the page. Your envelopes are much more aesthetically pleasing than my little notebook. I'm going to give this a try!!! Thanks!



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