Envelope System

[bubba]

Does anyone here use the envelope system of dealing with budget items? I'm trying to figure out which budget categories I would keep cash for. Groceries/Eating Out definitely but I'm not sure what else. What do you use envelope cash for?

 

[pryncess527]

I use an electronic budgeting program called YNAB that mimics envelopes, but without forcing me to use cash for everything. Honestly, I don't use cash for anything at all.

 

[bubba]

I don't use cash much right now either and I think that's a part of my problem. It's so easy to throw extra stuff we don't need into the grocery cart when I can use my debit card to pay for it. My thinking is if I have cash for groceries, I can only spend what I have with me.

 

[TheDeputysWife]

My DH and I just started using the envelope budget system. I was notorious for never having cash on me. I always used a debit card for everything. Since we started the envelope system I always have cash on me. Most of our money is in the bank and then we just have a planner that splits that into our "envelopes".
But we have a few categories that we only use cash for. We use cash for our groceries. I now plan ahead, look at sales, and spend under my budget each week, that never would have happened before.

Our allowance, each of us get the same amount of allowance a week that we can spend on whatever we want, its nice to have this in cash because if I have $ left over week after week its not just getting absorbed into our other monthly bills, but rather $ I can save up to spend on bigger things I may want.

The last one we have cash for is our household repair fund. We decided to have this in cash, because DH and I both thought that having some cash on hand at the house for emergencies would be a good idea. We've had times where we've had power outages for weeks which leaves us without access to our money several times. We chose the repair fund simply because it's one we don't spend a lot from so it builds up a savings in the event of emergency we have a decent amount of cash to access right away.

I was hesitant with the envelope system at first, especially being someone who didn't carry cash. Now after just a few months of doing this I am amazed by how much we've saved and paid off. We spent so much money just because we didn't pay attention. Now we know where every penny goes and are able to do so many things we didn't think we could afford, like spending the week at Disney! Good Luck I hope it works out for you, like it has for us.

 

[SEA333]

We use the cash envelope system for the following:

DH's gas
My gas
groceries
quarterly bills (water, home insurance, etc)
"Free" money ($40/week for each of us to be used any way we want...mine mostly goes to an occasional lunch out at work, or (mostly!) things for the kids that come up, like field trips, book orders, girl scout outings, etc. DH pretty much uses his for lunch, buying the kids something, or a haircut, etc)
small emergency fund (we keep a hidden envelope of between $500-$1000 hidden at home for small emergencies like if a pipe breaks or a window cracks, or one of the kids suddenly gets a hole in their shoe - no kidding LOL This really happened this week. And since my budget is already set for the month, I do not have "shoe" money allocated but he needs shoes before next month LOL, so we pick the cash from the small emergency fund)
Birthday gifts - we keep a small amount on hand for all of the birthday parties my kids are invited to - we have a firm $20 limit for each gift (although if we can find something the b-day child wants that is less than $20, it's all the better!!)

My rule is that since I write and keep the budget (DH is just along for the ride LOL), than if I budget $100 for groceries a week and spend under that, the balance is mine to keep. Since it is cash, it is easy to see at the end of the shopping trip exactly how much I have left. If I used my debit card, it would just get absorbed into la-la land and I would never really see where it goes.

 

[MacDalt]

I'm just starting a new budget. I'm keeping bill money and savings in the bank. Gas, groceries, spending are all cash. I'm trying to prove to DH that the debit card is the root if our issues! Lol. First week=great start!! Trying to build up a savings. DD needs a car soon and I need a trip to WDW.

 

[kkandaj]

We use cash envelopes (true cash) for:
Groceries/Toiletries
Entertainment (which includes our eating out)
Gas
My/DH blow money
Kids allowance
Haircuts (ours/dog)
Gifts
Clothing
School lunch money
Misc (This is usually like $40/month. This would be used for things that pop up at school for the kids--kindergarten graduation cap, class pictures, etc.)

I budget the month ahead and add categories if I know I will have a one time lump payment for something (baseball sign ups, personal property tax). There are categories I budget that are recurring monthly that I write a check for or pay online (dance lessons, tithe, bills, etc.)

The few times I have not stopped and gotten the cash out of the bank, I have regretted it! I just use my debit card too easily. I hoard cash.

 

[kkandaj]

I'm just starting a new budget. I'm keeping bill money and savings in the bank. Gas, groceries, spending are all cash. I'm trying to prove to DH that the debit card is the root if our issues! Lol. First week=great start!! Trying to build up a savings. DD needs a car soon and I need a trip to WDW.

The debit card (or our lack of keeping track of what we are spending) is the root of our issue too.

 

[KS_Disney_Dad]

Just started a cash envelope system this year with our tax refund. Otherwise it would slowly disappear. I set up...

- Vehicle tags (Nov)
- Dentist
- Plumber (new bathroom in basement)
- Groceries (separate amount for stocking the freezer)
- Christmas
- Emergency

We tend to pay as we go and when the fall hits, we get crushed with: 4 birthdays, 2 vehicles getting yearly tags, and Christmas presents from Oct-Dec. Easily the most stressful time of year.

With the envelope system for these categories the logic is to put some tax refund into them and then every 2 weeks add a little.

 

[chris31997]

Groceries, Dining Out, Gas, Personal(haircuts/my nails), Dance, Jujitsu, Household, Blow it, Rent

In a savings account that is split(we keep track of it): Car Maint and Tourist


Those are the major envelopes we use on a weekly/monthly basis.


Any bills that I would pay with a check, get paid through our bank online. I tell the bank when and how much.


Cash has saved us alot of money. We can track what we spend. Where we spend. I don't put things in the buggy unless it is on my list

 

[bubba]

Thanks for your responses everyone! I'm not sure if this makes sense, but to me, using the debit card does not equate to using real money. I know that sounds ridiculous, but if I use cash I am MUCH more careful! And any money left over at the end of the month goes into the Disney Fund!!

 

[MacDalt]

Thanks for your responses everyone! I'm not sure if this makes sense, but to me, using the debit card does not equate to using real money. I know that sounds ridiculous, but if I use cash I am MUCH more careful! And any money left over at the end of the month goes into the Disney Fund!!

Wish I had more left over at the end of the month!!

 

[MacDalt]

The debit card (or our lack of keeping track of what we are spending) is the root of our issue too.

Yep!! I can't blame the card! It's our irresponsible use of it!

 

[4HppyCamprs]

Thanks for your responses everyone! I'm not sure if this makes sense, but to me, using the debit card does not equate to using real money. I know that sounds ridiculous, but if I use cash I am MUCH more careful! And any money left over at the end of the month goes into the Disney Fund!!

Agree.

Sent from my iPhone using DISBoards

 

[Nennie]

I use mint.com, which is pretty similar to the envelope system, except it allows me to use my credit card (which I pay off every month of course) to earn FF miles.

The categories I have are:
Mortgage
Utilities
TV
Cars (which includes car payment and insurance)
Insurance (disability and life)
Groceries
Fast Food
Restaurants
Travel
Kids (daycare and activities)
Clothing
Gifts (birthday parties, etc)
Health
Lawncare (which I never really use! LOL!)


I have all the budgets set to "rolling" so if I go under budget one month, that extra money gets added on to the next month.

 

[pryncess527]

Thanks for your responses everyone! I'm not sure if this makes sense, but to me, using the debit card does not equate to using real money. I know that sounds ridiculous, but if I use cash I am MUCH more careful! And any money left over at the end of the month goes into the Disney Fund!!

I don't think it is ridiculous at all! I think one common problem with debit card management is that it encourages you to make spending decisions based on how much money is in your account. But that doesn't tell you what other things that same money needs to be doing! A zero-based envelope system, whether in cash or digitally managed, helps you to know that it doesn't matter if you have $3000 if that $3000 has the job of paying rent, taxes, car insurance, etc. It's easy to look at $3000 and say, I can afford dinner! With some form of envelope budgeting you don't get the money all mixed up that way, and if there is no money in the "eating out" category/envelope you know you can't afford to eat out. It's made such a huge difference for us, and after some practice, we even became comfortable using credit cards for rewards again safely knowing all our purchases are budgeted and the bill can be paid in full on any given day (and I usually pay it twice a month out of paranoia!!)

 

[vegasnative]

Thanks for your responses everyone! I'm not sure if this makes sense, but to me, using the debit card does not equate to using real money. I know that sounds ridiculous, but if I use cash I am MUCH more careful! And any money left over at the end of the month goes into the Disney Fund!!

Yes it makes perfect sense. It's always easier to swipe then to hand over cash. Nothing leaves your hand when you swipe. I've been using the "envelope" system for a LONG time. I use the cash envelope system only for groceries and mine and DH's personal weekly allowance. The rest I use electronically on a spreadsheet. I have "e-envelopes" on a spreadsheet and each pay period I put every single penny somewhere into one of the categories or e-envelopes. Some of our e envelopes, to give you ideas since you asked are: car payment, school & sports (we have 3 school aged kids all in sports, this covers new gear, playing fees, class pictures...), power/gas, cable, hair care, orthodontist, garbage, sewer, water, entertainment.
Yes it might seem like a like of categories, but it helps so much.
To give you an idea, our power company is call Avista. Each month I electronically stick $200 from our first paycheck (we only get paid twice a month) into the Avista e-envelope. Our last bill was actually $244, but it will start to come down now through the summer months. During the summer I tend to pay about $80-120 a month. So I averaged our bills for the last couple of years and it is about $180 over 12 months. (higher in the winter, lower in the summer), but since I put $200 in a month, I have a nice little cushion in the Avista e envelope. I have on several occasions taken the cushions from a category to fund a trip, leaving extra in that particular e envelope of course, I won't ever bleed it dry.
Anyways, that is how I do our personal budget each month and have been doing it that way for many many years. It works for me.

 

[twist]

I started using the cash system for at least 5 years now. It all started when I saw how much freakin money I was spending on my credit card for needless stuff! Especially during the holidays which could easily run 4k. Also, my closets got cleaned out and outfits were organized. Leading to less money spent on clothing. Enough was enough!!

Here's what I have:
House fund- Anything house related such as landscape, roof, etc.

Car Fund- A repair fund or upgrade fund.

Shopping: Clothing / gifts

Grocery : Target trips, whole foods, farmers market or Harris teeter trips.

Pets: Vet care / Food

Eating out : This way I put a few hundred a month into and when its gone its gone.

Parents: Money to assist parents when needed. Stocking their pantry, paying for a car repair, etc.

I figure about 50% savings over what I was spending with a card. Especially, Christmas !

 

[pampam]

Every pay

$20 household expenses. (eg. water heater breaks)
$50 large household expenses (eg. if the furnace dies)
$20 car expenses ( eg. tires, battery)

 

[MacDalt]

Haha, I think I have more categories than money to put in them!!