Sunday, June 5, 2011

Envelope Method

There was a time in my life when I didn't stick to a budget. Money came easy and I bought what I wanted when I went to the store.  I had an 'estimate' of what I targeted for birthday money and I tried to find the best deal but I basically just bought what I thought we needed at the grocery store and left it at that.

Them days are gone! *SMILE*

Enter the "Envelope Method"! My ears had heard but my eyes had not seen this method in practice so I had a bit to learn but I'm here to say that it's keeping me on track with my narrow budget and I'd like to rave about it.

It became necessary to make out a strict budget when our income dropped nearly half. I used a pre-made budget template on my computer from the Microsoft Works Word Processor program. I love this program. You enter your income and all your bills and at the bottom of the page it shows what you have left.

When my paychecks come in I have the bank teller cash them in small amounts so I can divide them easily into the different envelopes according to my budget plan. I only use the envelopes for the following areas:

- Gifts
- Dentist
- Allowance
- Grocery
- Entertainment
- Savings
- Taxes

I leave the rest of the money in the bank to pay bills that need to be written with a check or paid online.

This is how it works. Say for instance I need to go grocery shopping. I've learned by trial and error to divide the money for groceries into the weeks of that month otherwise I overspend at the beginning of the month and have nothing left at the end. I only take out the amount of money I need for that week.. no more unless there is a terrific 'stock up' deal and then I only take $10 extra.

I also have a plastic 'wallet' I found at the Dollar Tree that has individual compartments with tabs. It reminds me of a coupon wallet. I've labeled each tab to match my envelopes. Once I take the money from the envelopes I place it in the marked compartment. This way I don't end up mixing the money from the different categories once they leave the envelopes. 

It's really very simple and it has helped me stay within my $200 a month grocery budget.

I'd really like to hear what budget program you use on your computer or free online. I'm needing to download one to my laptop.  How do you stay within your budget?