By Popular Request: The Envelope System

Everyone always asks me how I budget so well. It's really hard for me to give away my secrets...not because I don't want to share but because it's hard to explain. I'm going to try my best.

Our budget is fairly simple. I'm a stickler when it comes to money...if we can't afford it, we don't buy it. If we put it on a credit card its because we bought it online...not because we don't have the money. We own our car, so we don't make payments. There is also only one driver in the family. So, you will need to adjust the budget to meet your needs.

First, you need to sit down with all your bills. The bills we pay every month are rent, car insurance, renters insurance, Banfield, Netflix, electric, and cable. Our cell phone bills are not included, but you can include them in your budget. Add everything together to find out how much you have to spend every month. We put this amount of money into our checking account. We treat our checking account like a credit card...if we take money out, it goes right back in. There is always (close to) the same amount of money in our account. Sometime I sneak a little extra in there...you know, for a rainy day. 

So, say for example your bills total $1000. You get paid twice a month. You need to be putting $500 each paycheck into your checking account (for the record, I hate direct deposit...I need the physical money. I know, I'm weird.)

Second, make a list of everything else you spend money on. My lists are always different (I usually budget a year at a time...but redo it every three months to make adjustments, that are usually in our favor.) This is our current list...

Grocery

Date

Replace in Savings (we had an emergency, working on replacing the money)

Vacation

Gas

Creditors

Miley

Summer

Eventually we'll have two weddings to go to, so those will make the list. And Christmas will be on there towards the end of the year. Once we replace the money in the savings account we'll be able to start saving more.

Okay, so now that you have your list...figure out how much you need for all of those categories per pay. For example with our next pay check we are putting $150 in the grocery envelope. You can either use the $150 during those two weeks or carry some money over to the next pay. These are my grocery shopping hints.

Third, whatever is leftover is your spending money. Now, I know that might sound rough...but don't forget, your groceries, gas, bills, and date nights are already covered. Personally, I don't spend that much during the week...I have an awful coffee habit but I've learned to suck it up and drink it at home instead of going to Starbucks everyday. I've been called a "money hoarder." I'd rather save money to do stuff instead of buying things. Oh well...sue me.

Fourth, only spend what you have. If you want to go on a date and the envelope is empty...looks like you'll be making dinner at home that night. I also prefer to only spend cash..I hate debit cards. Hate hate hate. But I know I'm in the minority with that one. I have converted Danny though!

Fifth, so...since I'm a money hoarder....I never spend change. Ever. We keep it all in a jar and empty it out every few month. Keep in mind we've only been married for a year...we've already saved enough change for a trip to Williamsburg, Boston, and getting ready to empty it out for another mini-trip!

I know it sounds rough, but once you get used to it...you will be saving money. I've been living by the envelope system since I was 17. I've paid for trips to Disney and Jamaica using mostly change. Once you really get into budgetting you'll discover you love coupons...and since you'll be buying more food with less money you will be eating at home more...you'll be spending less money eating out. 

Short-term and long-term having a budget is very important. If this system doesn't work for you , you should find one that works. You'll thank me later!