Question about how envelope method works exactly…

Budget101 Discussion List Archives Budget101 Discussion List Question about how envelope method works exactly…

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    • #253838

      We use the envelope system. We decided on our budget and only the

      day-in-day-out type money comes out of the account and into my

      envelopes. I have envelopes for groceries, household items, pet

      supplies, gas/oil, dining out, clothing for DD and DH & I, scout money

      (I’m a leader I need to get supplies on a fairly regular basis),

      homeschool supplies (books, paper etc. – this envelope usually just

      builds up until the homeschool fairs), & entertainment. I divide up the

      money across these envelopes and pay out of these envelopes. There is

      no borrowing from one for the other. If my entertainment envelope is

      empty, no movie or whatever for us. Dining out, same thing (this

      envelope is mostly for Wednesday night dinner at church, a soda here or

      there while out, and “emergency meals” for DD after swim when she is

      *starving* and we have errands to run before going home to eat. Yes,

      yes, I know I should plan ahead and pack a meal..just doesn’t happen though)

      Beyond that, all the money stays in the main bank account to pay the

      major bills. Some folks go so far as to open “sinking” fund savings

      accounts. Accounts to save up for things like a new car, vacation,

      Christmas, car repairs, home improvements. Once the $$ goal has been

      reached they take the money out and buy whatever they have been saving

      for and they pay CASH, no CCs allowed. 🙂 We have gone totally to a

      CASH basis from livng on CCs, it was a tough few months living

      within/below our means but it has been so liberating! We took a 7 day

      Disney vacation last December on saved money and paid cash for it all.

      In two days DH and I are going back to WDW for an adult get away and we

      are paying cash for it too. It is so nice coming home from a relaxing,

      fun vacation and not worrying about the bills about to hit from the

      vacation! I keep saving up my “Entertainment” envelope funds to have

      some mad money for while we are down there.

      The biggest thing about envelopes is to budget and be disciplined.

      Commit to no CCs, take them out of your wallet. If you don’t have the

      cash, you don’t get it until you have saved the cash- real simple. To

      be fair, you should also have an emergency fund established so when

      things go wrong (and they will) you can use that to pay for

      car/vet/repair bills and not whip out the ole CCs.

      HTH!! Check out Dave Ramsey’s site for some good guidelines.

      Diane in GA

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Budget101 Discussion List Archives Budget101 Discussion List Question about how envelope method works exactly…