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?


  1. I use Quicken, at the beginning of the month I enter all transactions for the month using dummy check numbers, I enter in for each Friday of the month set expenses such as groceries, gas, lunch money, tithe, and about $25 for misc, I then enter in estimated deposits for each Friday of the month, my husband works out of doors so his paychecks are affected when he cannot work due to inclement weather. I then enter our monthly bills consisting of utilities and insurance. This gives me an excellent overview of the month and I can figure out what I want to put in savings. As I pay bills or make purchases I edit the dummy check number with a real check number or transaction number.
    I find that this method of budgeting works well for us.

  2. Honestly, I don't tend to stick with my grocery budget each month. Our budget each month, is usually around $400 for 4 people (2 adults, & 2 11 year old boy who is currently a bottomless pit, and his twin sister). Household & HBA have their own budget. With summer comes an opportunity to save some, with fresh garden produce abundantly available, but still. I know people who have more children to feed, who spend less. Maybe I should look into this envelope method or simply just leave the checkbook & debit card at home, when I go to Kroger! Cash only would probably keep me on my toes!!

    Thanks for the inspiration!!

  3. Your post about using envelopes brought back memories to me from the 1950's. My cousin and her husband used the envelope method back then. She was 13 years older than me, and I was very close to her..... and admired/respected all that she did.

    I remember going to the bank with her on Fridays (which was pay day for them).... and she would have all these white envelopes labeled and she'd distribute their money ....

    What I remember the most was the vacation envelope....each year they took a vacation.

    My mother and dad were divorced and we were always short of money, but the thought of saving money for a trip was so exciting..... and I was fortunate enough to be included in several of their vacations.

    Enough of my history...... I use Quicken.... but I think the envelope method is great!

  4. My method is the Excel spreadsheet that my husband used when I married him in 2000. We continue to use it, even though, because of his Alzheimer's, my husband doesn't do the finances now.

    I am trying to get that food amount down with coupons so I can put more into the gas budget.

  5. @ Bean: I've used Quick Books for our business and personal for years but I've never used it for a budget. What a great idea!
    @Coolwhip: I think you're doing great if you're feeding 4 people on $400 a mo.
    @Dolores: I loved your story.
    @Carol: I'm so proud that you're using coupons! :-) You go girlfriend!

  6. I'm not on a tight budget these days, although I try to keep a tight reign on spending. Our life is different, our income is good but we are back and forth between states, and Hubby travels a lot now, so we just live different than we used to. Funny though, although I could spend more now, I still keep many of the old habits going, and sometimes feel 'wrong' if I don't. Like today I bought dog food even though I couldn't find my coupon--and low and behold it had been in my pocket. Made me a little mad. :)But since it is 1/2 price this week, I may buy one extra bag and use the coupon, Moj will eat it before its on sale again.

  7. I remember so clearly my dad doing this.

  8. Back in the 1990's my husband went to a new job that paid once, at the end of the month. We had been on an every two week paycheck. My husband was a spender and I knew we'd have nothing at the end of the month. I paid bills by check then took the rest out and put it in envelopes for groceries, gas, christmas, vacation, clothing, etc. It worked great. You really pay attention to what you spend when there's an "end" to your envelope. so funny to read this post because I was just telling my daughter about the envelopes and I'm going to start again. Good luck.

  9. I used to use coupons when my children were young and every year we would go on vacation with the money I saved using the coupons, of course would separate it every time I bought groceries. Now we eat Organic and it's more expensive so difficult to save on anything. Whole Foods does have coupons and use them whenever I can. Hugs...Lu

  10. My hubby used the envelope method before we got married before we ever heard of Dave Ramsey. It definitely works! Thanks for sharing!


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